Thinking about commercial space ship math ala the Solar Clippers books. This is tangentially related to my pbta hack Solar Wind & Sale, but -- and let me be clear -- I'm not really interested in RPGs: The spreadsheets.
I am interested in playing around with numbers.
Here are three scenarios as a family space ship develops a niche. Throughout each, I am assuming there are 8 staterooms, useable by crew or passengers. Further, I am assuming a mortgage on 50 million dollars at 8% interest, approx 30,000 per month. 20% of the profit is the Owner's Share, 10% is the Captain's Share. Each officer receives a double share, crewmembers depending upon their ratings.
Scenario 1: Cargo Hauler
Officers: 3, each receiving a double share of profits
Crew: 5, each receiving a quarter share of profits.
As a standard cargo hauler, you need to buy and sell cargo. You are doing arbitrage, betting the price will be higher at point B than at point A. You have to risk your capital investment when you by cargo.
Some assumptions:
(1) One trip per month
(2) Costs includes: Cargo, Mortgage, operating insurance, engineering supplies, crew salaries, crew supplies. This totals approx 120k cost per trip.
(3) Cargo can be sold at 130k.
(4) With only quarter share crew, the officers are doing most of the work. You don't want to leave quarter share unsupervised, so the officers take watch with them. The Engineer and Cargo Chief both have to take watches.
This give a net profit of 10,000, and 7.25 shares. The Owner's receive 20%, the Captain 10%. 7,000 is distributed to officers and crew, and share size is ~966. The quarter share crew members receive ~250 plus salary. The officers receive a little under 2,000 plus wages. The Captain receives a grand extra.
Scenario 2: Cargo Transit and Some Pax.
After a while, our crew starts finding a niche. They hire a steward to cook, and realize they can use the spare cabins for passengers.
Officers: 4, each receiving a double share of profits
Crew: 5, each receiving a half share of profits.
Some assumptions:
(1) The ship has mostly moved to transportion cargo jobs, but is still buying and selling some. This has two effects: (a) The cost per cargo is reduce, (b) They can go on 2 trips per month instead of 1.
(2) They start leasing out the spare cabin, bringing in money from passengers. They also need to pay for supplies for pax and insurance.
(3) The crew all become half shares, making the lives of the officers easier and increasing salaries and shares. Crew salary increases from ~250 a person to ~500 per month. The officers now each have only 3 jobs.
(4) As a result, the overall cost per trip goes down to 60,000, instead of 120k. This is half the cost!
(5) The total income goes down to 75k, down from 130k.
This gives a net profit of 15,000. The Captain takes 1,500, the Owner's take 2,000 and 10,500 is distributed the the crew. There are now 10.5 shares: 8 for the now 4 officers, plus 2.5 for the 5 crew. That works out to share sizes of 1,000 -- about the same as before.
But, this is tremendously better:
(1) The crew are now making 500 + wages, and the wages are bigger.
(2) The officers are making roughly the same per trip.
(3) The Captain receives an extra 1,500 per trip!
(4) There are twice as many trips per month! Every is receiving the bonus twice a month!
Scenario 3: Quick Luxury Ship
Trying an experiment, our crew converts more of the space to passengers. The Steward and XO fall for each other, freeing up a space.
Officers: 4, each receiving a double share of profits
Crew: 6, each receiving a full share of profits.
Some assumptions:
(1) The crew get reassigned to three per room, and all the crew pass the full share test. This takes a lot of pressure off the officers. The officers now only have two jobs each.
(2) Due to the number of pax, they hire a full share crew steward in addition to the ship's steward.
(3) A bunch of other costs go up: crew supplies, insurance (all them pax), supplies for the passengers. The total average per trip goes up to 75,000 instead of 60,000. This is a 25% increase!
(4) The four staterooms can each be leased out for 20k per trip: this is mostly honeymooners and business tavel. There's about another 20k made in cargo.
(5) The business is now somewhat diversified, as they can buy and sell cargo when necessary, transport packages that need to go fast, and transport passengers. I've shown them with just pax and jobs, without buying and selling any cargo.
This results in a profit per trip of 25,000! The number of shares has increase to 14 (8 for the 4 officers, 6 for the full share crew). That's 1,250 profit per share.
The crew each get a full share: 1,250 + wages! The profit per crew member doubled. The profit per officer increases from 2,000 to 2,500 + wages. The Captain makes an additional 2,500!
Moral of the story: Train and empower your employees, and the economics of the Solar Clipper universe will pay dividends.
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slight edit to scenario 2, so they are in cargo, transportion, and pax. This was a matter of shifting expenses around, so it didn't affect the overall costs or revenue.
ReplyDeleteI might suggest (with a smile): Meta-moral of the story: When you go in to a spread-sheet with a lot of unknowns, and the unconscious conviction that the SC universe will pay dividends if you train and empower your employees, you discover that it does.
ReplyDeleteYes, but its so much fun to do.
ReplyDeleteAlso, there's love and labor involved in this!
No question! And I love it. I think that it reflects the SC universe with great fidelity. Are you going to drop your thinkings in Lowell's email box? I think he might be tickled.
ReplyDeleteI do know Mr. Lowell was very interested in supporting me when I was trying to make an SC game though that was before he got a publisher. I know you're working on something slightly different but I thought I'd mention my experience.
ReplyDeleteI'll go ahead and send him this link.
ReplyDeleteAh ha!
ReplyDeleteAssuming you'd want ~10 million to buy a ship, how long does it take to get there under each scenario? Assuming the Captain invests her entire profit into it and saves saves saves.
Scenario #1: Over 3,000 trips, at one trip one trip per month. That's 250 years. Impossible.
Scenario #2: Under 3,000 trips, at two trips per month. That's 125 years. Impossible.
Scenario #3: About 1,600 trips, at two trips per month. That's ~60 years. Virtually impossible, but makes it relatively easy for the next generation.
Kinda explains why so many officers invested their earnings.
ReplyDeleteAnd, 10 million is what I'm thinking of as the down payment. Just to go from officer class to owner class takes some serious wealth.
ReplyDeleteThat's assuming that the money is invested in instruments akin to piling it under a mattress, of course. The question of lived experience would be more like owner's share, with profits being reinvested to try to bootstrap profit on a ship you "own" but with a hefty mortgage.
ReplyDeleteFundamentally, if the company could pay the ship off in thirty years at retail price, my first pass common-sense filter tells me that if paying off the used price takes 60 years, something's gone strange in your calculations.
I think there's a misunderstanding.
ReplyDeleteThe mortgage (for lack of a better word. Business loan?) of the ship is a pre-profit cost. That's 50 million at 8% over 30 years, or (according to google and some rounding) 360,000 per month.
In Scenario #3, the Captain is making something like 10k per trip, at 2 trips per month. That's 20k, which is on the wrong order of magnitude ti pay for a ship.
As i'm doing it now, I'm seeing an error, but not one on the order of magnitude. I'll check it again at some point, but I think that's roughly right.
Key thing: Even in scenario #3, the Captain's share (10% + double share) is only a third of the mortgage.
ReplyDeleteWilliam Nichols: Ah, yeah. I see where you're coming from there now. The accumulation of capital is (as it so often proves throughout history) a powerful gatekeeping force.
ReplyDeleteSo ... Captain's share is inadequate to the task. Any individual crew member's share is inadequate to the task. Sounds like somebody should promote the formation of some sort of ... hrmm, what would you call it ... co-op?
Another story that could be written:
ReplyDeleteIsh, at school, tells the other officers about the coop and how much money he made as a quarter share. The Lois continues to have a coop and as those crew go to other ships, they form coops.
By the time Ish gets out of school, it is becoming fashionable on the large corporate freighters to have a coop. Organization pops up on stations to support it, including organizations that sell goods for the crew and keep a percentage -- a coop's coop, if you will.
Ish brings this to the smaller ships, and the existing infrastructure makes it that much easier for crew and officers of small ships to join.
It looks like everybody wins. Who loses?
Nobody loses economically. Company planets (particularly) suffer losses in the political arena.
ReplyDeleteThe entire series is filled with economic inefficiencies ripe for the plucking. It stretched my suspension of disbelief for a while, then I got comfortable with: Ish is an outsider, and sees things no one else does.
ReplyDeleteI thought of it more as "Ish is for the most part blissfully ignorant of the way that more powerful and aware radicals use him as a pawn in order to unravel inefficiencies that were deliberately put in place to benefit entrenched political interests," but potayto, potahto.
ReplyDeleteAbout the only place I can think of the distinction cropping up is in the prospect of using biomass from environmental to provide more food self-sufficiency for the clippers. That would be a huge reduction in ship-board inefficiency, but wouldn't increase the destabilizing effect of the clippers upon the inequities of the stations they visit, so nobody prompts him to follow up on it, and he doesn't.
Do we ever find out why Captain Gigone, scion of a powerful spacer family, is working for FF rather than owning her own ship?
ReplyDeleteAs I recall, she is described as doing so specifically to seek out impressionable spacers and help them to make a difference.
ReplyDelete