Here is Why SpaceX programs are so cheap

We all are now aware of the upcoming tech advancements in rocket science industry by Elon Musk led SpaceX. They have made reusable rockets. Now he's planning to use to those reusable rockets to travel across the world within minutes.
But how can they be cheap? we remember them being worth billions of dollars. Well now they are worth millions(actually that's only relatively cheap).

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First, SpaceX designed its Falcon rockets with commonality in mind.

No more complicated, different parts for different stages of its rockets; both of Falcon 9’s stages are powered by RP1 and liquid oxygen, so only one type of engine is required. Both are the same diameter and are constructed from the same aluminum-lithium alloy, reducing the amount of tooling and the number of processes.

SpaceX developed its own Merlin engines; with a design that is called a “pintle” which uses a needle-like injector that was less expensive to make and less susceptible to combustion instability.

Significantly, the Merlin engines—like roughly 80 percent of the components for Falcon and Dragon, including even the flight computers—are made in-house. That’s something SpaceX didn’t originally set out to do, but was driven to by suppliers’ high prices.

A recent study by NASA and the Air Force finds that it cost about $440 million for SpaceX to get from a blank sheet of paper to the first Falcon 9 launch (a figure, Musk says, which also includes most of the Falcon 1 development). If NASA had done the same thing, with its management structure and traditional use of aerospace contractors, the study finds, it would have spent three times that much.

Then, this is the next plan to cut costs even more:

SpaceX’s ability to land, re-use, and re-launch their rockets.

SpaceX made history on March 30th of this year, with the very first successful relaunch of a reused 14-story main body of a Falcon9 rocket, which carried a SES-10 communications satellite into space.

That means that SpaceX’s launches can now be cheaper than all their other competitors who have not yet developed this cost saving ability.

In March, SpaceX President Gwynne Shotwell said the company could expect a 30 percent cost savings from reusing the first stage. If this translated into a 30 percent price reduction to customers, that would drop Falcon 9’s advertised price to $42.8 million from today’s$61.2 million.

SpaceX founder Elon Musk has said the first stage accounts for about 75 percent of the total vehicle cost. If the 40 percent gross-margin estimate were correct, that would mean a total first-stage cost of $27.5 million.Musk has said the first-stage engine could be reused dozens of times.

If SpaceX passed on to its customers 50 percent of the cost savings, the company could reduce today’s Falcon 9 price by 21 percent, to $48.3 million, Jefferies concludes.

If SpaceX gave customers 100 percent of the savings, the launch price would drop by up to 40 percent, to $37 million.

Although there is no way to determine the exact cost savings for every launch of a reused rocket, due to so many unique factors involved in the refurbishing process, one thing is clear—there will be a massive cost savings for those who use SpaceX’s space launch systems.

source:https://www.quora.com/How-can-SpaceX-launches-be-so-cheap