RFID System Components and Costs

Deploying a radio frequency identification system involves a lot more than purchasing the right tags and installing the right readers (see Basics of RFID Technology). To get business value from the all of the information collected, companies will need middleware to filter the data. They may need to upgrade enterprise applications and integrate it with RFID middleware. Each component will have up-front costs and some unexpected costs.

It's not possible to provide a list of every element that every company will need and the cost of those systems, but we'll explain each of the major components, provide some guidelines on costs and point out where there might be some hidden costs. Keep in mind that every company's needs—and every application—are different, so costs will vary widely from implementation to implementation.

Tags and Readers
Tags and readers are the main components of an RFID system. Passive tags are cheaper than active tags. But pinning down tag costs is not easy.

UHF reader from Alien

The cost of a passive tag depends on its frequency (a high-frequency tag has more copper in the antenna and generally costs more than an ultra-high frequency tag), the amount of memory, design of the antenna and packaging around the transponder. Passive tags generally range from 20 cents for the simplest license plate tag purchased in high volume to several dollars for a transponder embedded in a key fob or plastic housing, to protect the tag from heat, cold or chemicals. An RFID transponder in a thermal transfer label that can be used for printing bar codes is typically 40 cents or more.

An RFID tag is often confused with an RFID label. A tag is a transponder mounted on a substrate. It can be embedded in packaging or stuck on with adhesive. An RFID label is a transponder sandwiched between a layer with adhesive and paper that can be printed on.

In addition to the tag price, companies need to consider the cost of testing passive tags. Failure rates among tags ranged from zero to 20 percent in 2004 for UHF EPC tags. And while that figure will improve as manufacturers get more sophisticated, companies still need to test tags to ensure they are functioning. And they may need to purchase extra tags to compensate for the defective tags that need to be discarded.

Active tags range from $10 to $50 or more. The cost depends on the size of the battery included, the amount of memory on the microchip and the packaging around the transponder. Active tags are not mass-produced in high volume and don't have problems with antennas detaching from the microchip because they are usually housed in protective plastic.

UHF readers range in price from $500 to $3,000, depending on their functionality. Dumb readers are readers with limited computing power. They tend to be cheaper than intelligent readers, which typically have on-board computing power and can filter data, store information and execute commands. Agile readers can communicate with tags using a variety of protocols, and multi-frequency readers can read tags using different frequencies. Agile and multi-frequency readers may also have on-board computing power for filtering data and running applications.