Rules Only: The paradox of passenger pricing and subsidies

[Spinward Flow]

A mathematical quirk I just realized from my recent formulation of needed CTE (Cargo Tons Equivalent) per destination delivered to in order to make a profit on the transit has some very interesting implications for merchant starship design with respect to passenger services.

For reference (LBB2.81):

• Each high and middle passenger requires an individual stateroom to occupy (4 tons) which has a life support overhead cost of Cr2000 when occupied.
• Each low passenger requires an individual low berth to occupy (0.5 tons) which has a life support overhead of Cr100 when occupied.
• Passenger ticket prices (interstellar non-charter): Cr10,000 (high), Cr8000 (middle), Cr1000 (low)
• Passenger ticket prices (interstellar charter): Cr9,000 (high), not applicable (middle), Cr900 (low)
• High passengers require the services of an onboard Steward among the crew, 1 Steward per 8 high passengers (round up), costing additional tonnage for their stateroom(s).
• Medic-2 skill offers +1DM on survival rolls for low passengers (5+ on 2D).
• Cargo transport ticket price (interstellar non-charter): Cr1000 per ton
• Cargo transport ticket price (interstellar charter): Cr900 per ton

As a matter of first approximation for a starship that is not under subsidy we wind up with the following net results for (revenue - costs) / tonnage ...

• 1 High Passenger = (10,000 - 2000) / 4 = Cr2000 per ton (2x non-charter, non-subsidizedcargo rate) (not including Steward)
  • 8 High Passengers + 1 Steward = (80,000 - 21,000) / 36 = Cr1638 per ton (x1.638 non-charter, non-subsidized cargo rate)
• 1 Middle Passenger = (8000 - 2000) / 4 = Cr1500 per ton (1.5x non-charter, non-subsidized cargo rate)
• 1 Low Passenger = (1000 - 100) / 0.5 = Cr1800 per ton (1.8x non-charter, non-subsidized cargo rate)
• 1 ton Cargo = Cr1000 per ton (1x non-charter, non-subsidized cargo rate)

We can do the same thing again as first approximation for a starship that is not under subsidy and also operating under an interstellar charter:

• 1 High Passenger = (9000 - 2000) / 4 = Cr1750 per ton (1.75x non-charter, non-subsidized cargo rate)
  • 8 High Passengers + 1 Steward = (72,000 - 21,000) / 36 = Cr1416 per ton (x1.416 non-charter, non-subsidized cargo rate)
• 1 Middle Passenger = not applicable
• 1 Low Passenger = (900 - 100) / 0.5 = Cr1600 per ton (1.6x non-charter, non-subsidized cargo rate)
• 1 ton Cargo = Cr900 per ton (0.9x non-charter, non-subsidized cargo rate)

So far so good. All of the passenger service options yield more revenue per ton of starship than the equivalent option of spending those tons of capacity on cargo. So outside of subsidies, passengers are more valuable than cargo when it comes to transport costs ... however, speculative cargo profits can potentially outstrip these rates of return (sometimes quite handsomely) so having at least some cargo capacity for the transport of speculative cargoes is desirable, if not always optimal, for every jump when analyzing the alternatives.

But look at what happens to those same comparisons under subsidies in which the subsidizing government takes 50% of the gross revenue of ticket prices to the balance sheet of the starship operator.


As a matter of first approximation for a starship that is operating under subsidy we wind up with the following net results for (revenue - costs) / tonnage ...

• 1 High Passenger = (5,000 - 2000) / 4 = Cr750 per ton (0.75x non-charter, non-subsidized cargo rate) (not including Steward)
  • 8 High Passengers + 1 Steward = (40,000 - 21,000) / 36 = Cr527 per ton (x0.527 non-charter, non-subsidized cargo rate)
• 1 Middle Passenger = (4000 - 2000) / 4 = Cr500 per ton (0.5x non-charter, non-subsidized cargo rate)
• 1 Low Passenger = (500 - 100) / 0.5 = Cr800 per ton (0.8x non-charter, non-subsidized cargo rate)
• 1 ton Cargo = Cr500 per ton (0.5x non-charter, non-subsidized cargo rate)

We can do the same thing again as first approximation for a starship that is operating under subsidy and also operating under an interstellar charter:

• 1 High Passenger = (4500 - 2000) / 4 = Cr625 per ton (0.625x non-charter cargo rate) (not including Steward)
  • 8 High Passengers + 1 Steward = (36,000 - 21,000) / 36 = Cr416 per ton (x0.416 non-charter cargo rate)
• 1 Middle Passenger = not applicable
• 1 Low Passenger = (450 - 100) / 0.5 = Cr700 per ton (0.7x non-charter cargo rate)
• 1 ton Cargo = Cr450 per ton (0.45x non-charter cargo rate)

What this ultimately means is that high and middle passenger services under subsidy are borderline equivalent to the net profits generated by cargo transport when not chartered, but under charter high passengers can actually cause a ship to lose money relative to the alternative of having spent that passenger tonnage on providing more cargo space.

The reason why this happens is that under subsidies the gross revenue the operator is bring in is cut in half ... but the expenses for life support remain the same, reducing the available profit margins on passengers.

Consequently, from a raw mercantile capitalist perspective in which profits are paramount ... the "expense" (in tonnage) of offering passenger services will often times not be worth it if it means reducing potential cargo capacity (which can be wildly more profitable than passengers through speculative cargoes). Of course, eliminating passenger services also means eliminating the opportunities for Patron contact encounters and other "person to person" business opportunities.

Passenger services "make sense" for ships that are NOT operating under government subsidies (and are able to reliably fill up their staterooms to capacity) ... but for ships that ARE operating under subsidy, passenger services can represent an opportunity loss that ultimately affects the bottom line profits in an adverse way (particularly when chartered), relative to the alternative of converting those passenger staterooms into yet more cargo hold tonnage. And even when a subsidized ship IS able to cross the threshold of revenue vs costs, their maximum profit potential is still being impacted by the 50% subsidy rake. Of course, under subsidy a starship operator is not obliged to pay for the construction cost of their starship, which tends to skew the economic incentives rather wildly depending demand for transportation services (passengers and cargo both).



And finally, a point which isn't addressed directly within the context of the LBB2.81 trade rules, but which can certainly add additional Flavor Context™ to merchant operations in a campaign setting ... not every third party wanting to have cargo delivered across interstellar distances is going to want to watch their goods be sent off to the starport with a hand wave towards the departure and a receipt. Some third parties are going to want to "travel with" the goods that they are booking cargo hold space to ship.

These can be "traveling salesman" types who are Non-starship Merchants who don't own a starship themselves but are still "in the business" of interstellar trade and who want to move around with their cargoes to handle business themselves on various world destinations.

Some cargoes will "require escort" for security reasons, meaning that the availability of passenger service on a starship becomes a make or break decision as to whether or not they will want to send their cargo aboard your starship to your announced destination.

Some cargoes will involve interstellar business transactions by company executives needing to "travel with" their cargo (and presumably secretary/support staff) and would prefer to book passage of people AND cargo on the same starship so they all arrive together at their destination.



So although in some contexts passenger services can "cost more than they earn" relative to the alternative of simply having more cargo capacity and no passenger services at all ... from a Referee perspective running a campaign, that isn't necessarily always a bad thing. In some contexts, a "pure delivery van" approach is going to be the superior option for how a starship ought to be designed and the sorts of clientele it will attract to make use of its services ... while in others a more "mixed" approach of offering passenger AND cargo services can be preferable, both in terms of design goals at the Naval Architect's stage and also when put into operation by small time independent operators.

 

[TheDark]

It's likely also worth considering that the High Passenger numbers are best-case scenarios, where there are 8 (or more) passengers wanting passage, which is often not going to be the case even with Pop Code A departures. Since the Steward's costs are fixed regardless of the number of passengers available, the revenue for a single High Passage on a non-charter, non-subsidized transport is as low as Cr 375 per occupied dTon:

Passengers​	Steward​	Staterooms​	Revenue​	Expenses​	Cr/ton​
1​	1​	2​	10000​	7000​	375.0​
2​	1​	3​	20000​	9000​	916.7​
3​	1​	4​	30000​	11000​	1187.5​
4​	1​	5​	40000​	13000​	1350.0​
5​	1​	6​	50000​	15000​	1458.3​
6​	1​	7​	60000​	17000​	1535.7​
7​	1​	8​	70000​	19000​	1593.8​
8​	1​	9​	80000​	21000​	1638.9​

Comparing the table to the values for other potential revenue streams, you need to consistently draw 3 High Passengers to be more efficient than cargo or 6 to be more efficient than Middle Passage. That latter is only likely on routes between two (or more) high-population worlds. For ships plying fringe systems with lower populations, a few Low and Medium passage berths along with cargo seems like it will draw more consistent revenue streams with lower expenses than trying to attract High Passage customers.

 

[AnotherDilbert]

• 1 High Passenger = (10,000 - 2000) / 4 = Cr2000 per ton(2x non-charter, non-subsidizedcargo rate) (not including Steward)
  • 8 High Passengers + 1 Steward = (80,000 - 21,000) / 36 = Cr1638 per ton (x1.638 non-charter, non-subsidized cargo rate

Much too simplified; you need to include the non-trivial cost of the staterooms, and the chance of empty staterooms. If you are using the passenger tables you will often not fill all staterooms, yet you still have to pay the mortgage on the stateroom, so you lose money on that stateroom for that trip.

On the other hand you can probably jump slightly more often than twice a "month" (depending on your definition of month), say 25 times per year (25 = ( 52 weeks - 2 weeks maintenance ) / 2 ).

A stateroom costs MCr 0.5, or MCr 0.1 + kCr 1 per jump with a mortgage, or MCr 0.1 + nothing per jump for a subbie.

 

[AnotherDilbert]

For ships plying fringe systems with lower populations, a few Low and Medium passage berths along with cargo seems like it will draw more consistent revenue streams with lower expenses than trying to attract High Passage customers.

Yes, this is essential to consider. Including a steward means that you can attract both High and Middle passengers, so you get two rolls for passengers, greatly reducing the risk that an occational low roll makes you go with nearly empty staterooms that trip.

Generally it is much easier to fill the cargo hold, at least for small ships. Hence when you consider the opportunity cost of converting some cargo space to staterooms you should assume higher vacancy rate for the staterooms.

In the end passengers are rarely profitable, but it's a game about people in space, so...

 

[kilemall]

Missing analysis part is the capital cost of the stateroom fittings especially if the ship is on mortgage.

You can neutralize the costs between cargo opportunity and passenger opportunity by just adding in that stateroom financed bit to costs, presumably divide by 2 for 2 trips per month.

And of course that mortgage overhead cost has to be paid whether the stateroom is filled, or not. Need to count that Steward stateroom too. Makes the subsidized merchant look better.

Charter might even be a normal method for people to do business off the beaten track. Could be charter brokers that put together passengers and cargo shippers that can't get a regular subsidized route or free trader going the low pop way. Their payoff is charging normal rates and pocketing the 10% difference- or possibly shipping their own speculative cargos on their already paid for cargo with their own agent riding along in the stateroom.

Another analysis point is the profit potential of a charter where the staterooms are not filled up. Still charging for the potential stateroom without the life support cost, and that could be a very nice little adjustment to the calculation.

 

[HanleyTucks]

And that's why the captain is willing to take that clueless young lad and old man who wish to avoid "imperial entanglements." They might be trouble, but they're paying well.

Too many forget that this is not designed to be an economic simulation, it's designed to be: science-fiction adventure in the far future. And so on things are designed to prompt and encourage ADVENTURE!

 

[McPerth]

Missing analysis part is the capital cost of the stateroom fittings especially if the ship is on mortgage.

And the 2 tons (assuming crew on double occupancy) for the steward stateroom...

And the fact if the steward has a sitll higher than 1 he will have 10% more pay (but then, he will attract more High Passengers)...

And the fact not always the High Passengers number will be an exact multiple of 8, so making your steward "less efficient)...

Amother paradox is that, according Alien Realms adventure No Credit Check, Middle Passengers may travel in double occupancy, making a stateroom more efficient, giving you 12000 Cr benefit (8000 x 2 - 2000 x 2 ), so 3000 Cr per ton (as middle Passengers don't require steward). Of course, that's in Vargr space, and we know they may use different rules, but, if so, I guess most Captains will not be glad when a High Passenger bumps Middle ones... Or some Vaptains may even forfeit the Steward to attract only Middle Passengers...