Starlink’s business model includes a monthly subscription-based service using a business-to-consumer (B2C) and business-to-business (B2B) model, where a user pays money monthly directly to Starlink to access an internet connection through satellites. According to Wall Street Journal reports, Starlink generated $1.4 billion in revenue and crossed 1 million users in December 2022. Also, in Q1 2023 (the first quarter of 2023), Starlink generated a “small profit” after making a loss for two subsequent years, 2021 and 2022, respectively.
Starlink provides global internet with the help of small satellites revolving in low-earth orbit that communicate with the terminal present at the user’s home. To get fast, uninterrupted internet, a user has to pay a monthly price set by company officials based on production costs and competitors’ service plans.
As of now, you have become quite interested in the Starlink business model and want to know about it. In this guide, I will provide you with a complete analysis of Starlink’s business model, including how it makes money, how much revenue it has generated, whether it is profitable or not, and what the current valuation of Starlink’s business is.
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How Does Starlink Make Money?
Starlink offers monthly internet plans ranging at different prices, depending on your usage and location, one-time hardware fees (Starlink kit), shipment charges, account management fees, and top-up plans (if you have exceeded your data caps and want more internet).
Currently, the major stream of income for Starlink is its standard plan, which costs $90-$120 per month. Starlink provides different types of internet plans, which include residential, priority, maritime, best effort, business, roam, and aviation, with which Starlink generates its revenue. Starlink Roam alone has 3,00,000 users that contributed $30 million in Starlink revenue.
Starlink also made a partnership with the aviation industry and offers high-speed internet to passengers flying in the air via its aviation plan, which also helps Starlink make money in the long term. According to Aviation Week, five big airlines—Qatar Airways, JSX, Hawaiian Airlines, AirBaltic, and ZIPAIR—are currently offering Starlink internet to their passengers.
Starlink’s collaboration with marine ships is also an astounding step to make more money. Under this government navy, privately owned ships and other marine boats can use Starlink internet while sailing through the sea. According to CNBC reports, Starlink will service more than 330 container ships in the first quarter (1 January–31 March) of 2024.
More than 80% of Starlink users are from North America. In the USA, the Starlink hardware kit costs $599 plus shipping charges, and monthly plans usually cost between $90 and $120. In Europe and Australia, the hardware costs and pricing are different. Starlink also offers B2B (business-to-business) service, where retailers can sell their hardware to consumers, or one business can take Starlink service for its employees.
Starlink Business Model in Detail
As I already told you, Starlink makes money from monthly subscription plans paid by users for accessing the internet. Starlink provides internet in areas where the cost of investment for fiber is very high and unachievable. However, by using satellite installation technology, Starlink achieved it and attracted millions of customers.
First, Starlink has a B2C model, where it directly provides its service to the needy audience and generates money. This majority includes Residential, Roam, and Priority plans. Second, Starlink also has a B2B model, where it directly talks to big brand businesses that need its services. This majority includes Aviation, business, and Maritime plans.
30-day trial and Cancel Anytime policies made Starlink more famous as they involved risk-free usage and built trust between the providers and consumers. Meanwhile, its competitors like Hughesnet don’t provide full refund options to its users.
Apart from internet service, Starlink shifted to many other services, which include Military services, the Starshield program, and cellular service, to increase its revenue. For example, the Starlink Starshield program got contracts of $70 Million from the U.S. Space Force in September 2023, while SDA (State Designated Agency) awarded $150 Million in 2019 for military operations.
How much revenue is generated by Starlink?
As of 2023, Starlink parent company, SpaceX, is not a public company, and since then, it has launched its IPO (initial public offerings), so it doesn’t have to publish its quarterly or yearly reports for the sake of its stockholders and investors. The Wall Street Journal collected the confidential documents of Starlink’s revenue and publicly announced it.
As per the Wall Street Journal, Starlink generated $1.4 billion in 2022. The estimated target made in January 2015 by SpaceX was $12 billion by the end of 2022. You might think that Starlink has not reached its target, but its growth is really astounding, and its users are also increasing at an impressive speed. The company targets future revenue of $30 billion by 2025 and wants to make the world’s largest satellite constellation of 42,000 satellites orbiting in low-Earth orbit.
Is Starlink profitable?
Yes, Starlinki is profitable. As of November 2023, Elon Musk’s official Twitter account announced that Starlink has achieved breakeven cash flow, which means the expense of a company is now equal to its sales. According to CNBC, Starlink has a single positive cash flow quarter in 2022 and is expected to make money in 2023.
For the current situation, Starlink’s profitability can’t be estimated as it is a privately owned company. But based on its user base and revenue, you can estimate that Starlink is profitable.
To achieve profitability, Starlink is currently expanding its internet-providing services to countries like India and the Philippines, where millions of customers are waiting for the internet and some of them have never used it. According to Kepois, 51.3% and 26.9% of the population of India and the Philippines, respectively, have never used the Internet, which is a very high number in countries like India, where the population is 1.5 billion.
Starlink Business Value
According to Reuters, as of July 2023, Starlink parent company SpaceX was valued at $150 billion. While talking about Starlink’s valuation, there is no current estimation made, but it is a big part of SpaceX’s valuation. Also, Starlink owner Elon Musk had a net worth of $219 billion in September 2023, of which 20% was contributed by SpaceX alone, which is the second most significant contributor to his net worth. Starlink’s IPO is expected to launch in the year 2027, and then its actual valuation will be disclosed to the world.