What Is the Average Royalty for RFID Software?

Is it generally a percentage of net sales or gross revenue?

—Name withheld

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I’m not exactly sure what you are referring to. Generally, when a company contracts with an RFID software firm to use its products, it pays a seat license, a monthly or annual fee, or buys the software outright. I have also heard of charges being incurred based on read events processed. So you might pay a penny each time a tag is read during a significant event (say, if a tagged object moves through a portal).

There is no average for any of these, as each contract is negotiated individually and depends on many different factors, such as whether the software company was involved with the deployment and received systems-integration revenue, the number of facilities involved, the number of users and so forth.

Royalties might be paid if, for example, a systems integrator wanted to resell software created by another firm. Again, though, this would be negotiated separately with each company, so there are no averages.

—Mark Roberti, Founder and Editor, RFID Journal