Are RFID Costs Prohibitive for Small and Midsize Businesses?

For SMBs, the upfront investment required for RFID systems used to be cost-prohibitive, but prices are now trending down, making the technology viable.
Published: May 1, 2022

Ed. Note: This article was originally published on Aug. 11, 2021, and was updated on May 1, 2022.

Ed. Note: This post originally appeared at the blog of  RFID Journal LIVE!, the world’s largest conference and exhibition focused on RFID and related technologies.

Implementing a radio frequency identification (RFID) solution in your small or midsize business (SMB) may help you save on costs, provide greater oversight and increase the efficiency of your day-to-day operations. While the technology has been around for decades, only recently have RFID costs come down enough to be a viable consideration for SMBs.

If you’re considering using RFID in your business, here’s what you need to know about the technology, where it will provide the greatest benefits and how to identify suitable suppliers. RFID is a versatile technology that supports many use cases. For  enterprises like Walmart, RFID is helping them to streamline the entire supply chain, from manufacturing to the retail floor. Read on to find out if you can benefit from the technology, as well as where RFID costs will be non-prohibitive for your business.

How Do You Calculate RFID Costs?

For SMBs, the upfront investment required for RFID systems used to be cost-prohibitive, but prices are now trending down, making the technology viable.

For SMBs, the upfront investment required for RFID systems used to be cost-prohibitive, but prices are now trending down, making the technology viable.

The first step to your  cost/benefit analysis is to define your exact use case. Since there are many different types of tags (transponders) available, you’ll need to determine what functionality you’ll require. If you are simply trying to track your inventory from stock room to retail floor, you can obtain a low-end solution that will cost about 7 cents per tag. Alternatively, if you’re moving large pieces of equipment between locations and require additional features like temperature or shock monitoring integrated into the tag, the cost may increase significantly.

The typical components required to make up an RFID system are tags attached to the items you need to track, an antenna that receives data and forwards it to the RFID reader, the reader that connects to the antenna wirelessly and captures the tag data, and a computer database with your use-case applications, such as receiving, inventory management or checkout software.

While each of these components will influence the system’s cost, the tag remains the biggest concern, as this will increase the unit cost for each item you wish to track. If you deal in high-value goods that require active tags, the price to implement the system may be negligible compared to the cost of the tags you’ll need to procure every month. A passive tag may cost less but will not provide you with additional capabilities, like real-time location tracking (RTLS), active broadcasting, or shock and temperature monitoring.

What Is the Difference Between Active and Passive RFID Tags?

A passive RFID tag does not have additional components except for an antenna and an integrated circuit. To read or store data on the tag, a reader (interrogator) sends a radio wave to the antenna, which converts it into energy and activates the circuit. This process, known as backscatter, can write new information to the passive tag in some applications. Active tags usually have additional components included in the design, like an integrated battery. With an internal battery, active RFID tags have longer read ranges and may include additional sensors to capture specific information about a product.

Active RFID tags come in two main types: transponders and beacons. Transponders work similar to passive tags, with a reader initiating communication before the transponder sends a signal back, thereby conserving the tag’s battery life. And beacons will always transmit a signal at set intervals for any reader within range, in order to detect and record.

What Use Cases Make RFID Costs Worthwhile?

Due to the technology’s versatility, RFID has already found a home in a wide variety of businesses. Whenever a company needs to track an item without using a direct line of sight (like with barcodes), there is an opportunity to implement an RFID solution. If keeping track of products, items or materials is increasing your labor costs, you should  consider implementing RFID to reduce your overheads.

Some of the key industries that benefit from RFID include:

Product tracking: Any time you need to check products in or out, as with a library or equipment rental business, RFID can be very useful.
High-value item tracking: Supply chains for expensive pieces of equipment can use active RFID to track all machines from warehouse to customer.
Event management and crowd control: When you need to monitor individuals in a crowded environment, RFID can automate most of your access-control processes.
Agricultural and pharmaceutical applications: If you need to generate an auditable history of a product for food processing or drug manufacturing, active RFID tags can reduce the cost of the required oversight.
Inventory management: Retail environments that have heavy traffic and need a streamlined stock-management and checkout system with integrated security can benefit from passive RFID systems.

How to Evaluate RFID Manufacturers and Costs

The current drive for digital transformation means there are many different RFID suppliers, manufacturers and solution providers available on the market. Once you know what your requirements are, you’ll need to start looking for a supplier or partner to implement your system. The best way to evaluate your prospective supplier is to list all the features you need the solution to provide. You can then map your supplier or tag capabilities to your set of features and determine the costs required to implement the technology.

Additionally, consider the following when making your decision: Can the system integrate with your existing processes or line-of-business applications? How difficult will it be to retrain your employees and suppliers to use the new system? And will you have to buy or upgrade any equipment for the RFID solution to work?

Small or midsize businesses looking to learn everything about current RFID costs, as well as which system capabilities are redefining the industry, should attend this year’s  RFID Journal LIVE! conference and exhibition. At the event, you will see the latest solutions in action and have an opportunity to interact with suppliers, manufacturers and other companies that have implemented RFID, all in one place.