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Avery's 7.9-cent Inlay Excites Industry

Avery Dennison's announcement of Gen2 inlays for 7.9 cents has excited the industry. Everyone that RFID Update has spoken with considers the offering to be a very significant and positive development for RFID.
Sep 22, 2005This article was originally published by RFID Update.

September 22, 2005—Tuesday's announcement by Avery Dennison that it is making available its Gen2 inlays for 7.9 cents in quantities of one million or more has pleased and shocked the industry. Everyone that RFID Update has spoken with -- from vendors to end-users to analysts to label conversion companies -- considers the offering to be a very significant and positive development for RFID.

In the first place, the aggressive pricing suggests that Avery Dennison is serious about establishing itself as a market leader. The company is a large one and was already known throughout the industry, but the new pricing makes it a contender for inlay market dominance. "The 7.9 cents will definitely establish Avery in the marketplace," said David Chose of CCL Label. "Before, they weren't as known as, say, Alien. This will bring them into the limelight." Dave Uland of WS Packaging Group said, "Avery's very serious about changing the market price point, and I think they'll be successful at doing it."

The phones at label converter companies have apparently been ringing off the hook with end-users eager to get tag prices based on the new Avery inlays. (Remember that inlays are but one component of the "RFID tag" end product, which costs, depending on many factors, roughly two to three times as much as the raw inlay.) Label converter companies, whose business it is to "convert" inlays into usable tags, typically avoid publishing their prices publicly since the vast majority of their clients require customizations that affect the cost of the final tags. But based on a number of conversations, RFID was able to get rough, conservative estimates on final tag prices based around the 7.9-cent inlays:
  • 15-20 cents/tag for volumes greater than one million
  • 20-25 cents/tag for volumes in the 250,000 - 500,000 range
  • 25-30 cents/tag for volumes in the 50,000 - 250,000 range
Given that there are very few million-unit purchases happening in the market today, most end-users are "probably going to be paying in the twenties," said one converter representative referring to the final cost per Gen2 tag with the Avery inlay. That pricing represents an overall 25 to 35% reduction in market tag prices, he said, "and that's a conservative figure."

Will such a precipitous drop in tag price, often used as the barometer of wider RFID technology cost, stimulate the demand so desperately needed for the industry to emerge from its lull? Many think that it will. "We think everybody's going to respond," said WS Packaging Group's Uland in reference to other inlay manufacturers feeling pressure to lower their prices. In one fell swoop, Avery has dramatically changed the dynamics of the tag market, and its competitors will have to adjust to the new conditions -- fast. "You're either in the game or you're not," said Uland. CCL's Chose concurred: "This could very well accelerate things."

Read the announcement from Avery Dennison
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