Can private-sector space business be profitable, or is it just an exciting way for billionaires to live out their fantasies?

Blue Origin, the space company created by Amazon founder Jeff Bezos, had its first successful test flight yesterday.

Its launch vehicle, the New Shepard, powered by a BE-3 engine, reached an altitude of 307,000 feet, where the space capsule separated to float gently back down to earth. The only failure on the day, per Bezos’ post, was that an attempt to land the launch the vehicle for reuse went wrong.

Bezos and Elon Musk’s SpaceX have been in a legal battle over patents on rocket reusability, which would dramatically lower the cost of future launches. While SpaceX is further ahead of Blue Origin in testing reusability, it has yet to land a rocket from a working launch.

This is the first real demonstration of Blue Origin’s technical abilities, and it shows why United Launch Alliance, the Boeing-Lockheed Martin joint venture that currently dominates the US launch market, tapped Blue Origin to develop its next rocket engine, based on the smaller version that flew yesterday.

But at a maximum height of 95 kilometers, this flight didn’t quite make it to what we think of as “space”—100 kilometers up or more. That puts this vehicle in the same category as Virgin Galactic’s SpaceShipTwo—space vehicles that haven’t left the stratosphere.

The company presents its vehicle and capsule both as a space tourism play, with Bezos asking for potential astronauts to sign up for opportunities to buy tickets and boasting of the largest windows on any spacecraft, and as a zero-gravity science lab for researchers.

The open question here is price: How much will it cost to launch the New Shepard? Unless the company can significantly undercut competitors like SpaceX on price—if it can get reusability solved, for instance—its best bet to escape being labeled as another mogul’s vanity space business may be as a rocket engine supplier, not an independent space access company.