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High Demand Keeps Tag Prices Steady
An ODIN report finds that the price of UHF passive RFID tags has remained static due to a high growth in demand—and that's good news, according to the study's authors.
Sep 29, 2010—A shortage in and increasing demand for RFID tags, along with the after-effects of the recent economic recession, have resulted in a static price for ultrahigh-frequency (UHF) passive RFID tags, with specialty tags rising in cost, according to the RFID Tag Pricing Guide 2010, released this week by RFID software and solutions provider ODIN. According to the study, for the first time since 2004, when the company began tracking tag cost, the prices of most tags did not drop compared with those of the preceding year. And in some cases, the report finds, they rose slightly, though discounts typically reduce the final price paid for tags, particularly in large quantities.
That static pricing indicates manufacturers are no longer bleeding off inventory at low prices, as they did in the past few years, says Bret Kinsella, who oversees ODIN's operations, marketing and sales. With supply outpacing demand, he indicates, tag manufacturers are keeping prices high enough to enable them to increase production and invest in research and development in order to meet that demand.
RFID Hardware Supply Struggles to Meet Demand). Wal-Mart Stores' apparel-tagging initiative has tripled the tag-growth projections for this year, the report notes, citing Reik Read, an analyst with Robert W. Baird & Co., which publishes the RFID Monthly newsletter. The Wal-Mart initiative, according to the study, caught tag manufacturers off-guard. However, there has also been an overall worldwide growth in tag usage, as well as silicon usage, resulting in a shortage of materials and leading to a delay in tag delivery by as much as 10 weeks.
This is the second tag-pricing report released by ODIN, following a similar study conducted in 2009 that included price lists for both high-frequency (HF) and UHF tags. This year, although HF tags are mentioned in the report, the pricing is isolated to UHF tags—which are drawing more interest from end users, Kinsella says, and have more changeable prices than HF tags. For both the 2009 and 2010 reports, the firm obtained its information by collecting list prices from manufacturers of the tags that were selling in the highest volume, as well as providers of tags representing a wide variety of types. Participating vendors included leading tag makers Alien Technology, UPM Raflatac and Avery Dennison, and specialty tag manufacturers Technologies ROI, Omni-ID and Confidex. ODIN also collected baseline data for its planned 2011 report, which will include such details as pricing for larger-volume orders (exceeding 1 million units), specialty tag price-break differences (as opposed to list prices) and details regarding exotic tags.
According to the report's projections, while the lowest-priced tags converted into adhesive labels remain at approximately 11 cents apiece, thanks to the stabilization of supply and demand caused by manufacturers' increased production levels, tags can be expected to drop to 7 cents each over the next two years. "We don't expect the price stability phenomenon to continue into 2011," the report states, adding that "as capacity catches up with demand, we expect the economics of higher volumes and increased competition to lead directly to lower tag prices."
UHF Gen 2 RFID labels remain at a price of around 15 cents apiece for quantities of 10,000, and 11 cents each when ordered in quantities of a million or more. Specialty passive EPC Gen 2 tags (typically encased in a tough protective material, and often designed for mounting on metal), such as those used in the aerospace and heavy manufacturing industries, showed an increase in pricing—from $3.21 for small specialty tags (less than 1,000 square millimeters [1.6 square inches] of horizontal surface) in 2009 to $3.52 this year. Prices for large specialty tags (larger than 2,500 square millimeters [3.9 square inches]) have increased from $4.69 to $5.01. However, the study notes, the prices actually paid for the tags have been close to those paid in 2009, due to discounts offered at the time of sale. "The story for 2010 is mixed," the study indicates. "Some specialty tag prices are higher, some lower, some stayed the same. Despite the notable rise in published pricing, we found [the cost of] these tags to be flat to slightly down overall."
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