A Cost Breakdown of RFID Adoption For Optimal Budgeting
Businesses looking to adopt RFID technology for their asset tracking systems or other processes often prioritise understanding the associated costs. This is no surprise given that the total expenses can vary significantly depending on whether a passive or active RFID system is chosen, each utilising distinct technologies to perform similar functions.
Understanding Passive vs. Active RFID Systems
Passive RFID systems rely on high-power, low-frequency actuators to transmit energy to a tag, which then reflects back a signal. In contrast, active RFID systems use battery-powered tags that communicate with access point readers throughout an area, transmitting data directly to a cloud-based or on-premise server.
The primary benefit of passive RFID lies in its inexpensive tags; however, this advantage is offset by the higher cost of the necessary infrastructure and its limitation to merely detecting the presence of a tag rather than pinpointing its exact location. On the other hand, active RFID systems, while more expensive due to the costlier tags, provide precise location tracking and require less complex infrastructure.
The tradeoff between these two systems boils down to balancing accuracy and complexity against overall system costs. Passive RFID systems shift the cost burden from tags to infrastructure, while active systems distribute costs more evenly across both components.
Main Cost Components of RFID Implementation
1. Equipment Costs
For passive RFID systems, equipment costs include RFID readers, cabling, and antennas. Achieving the desired location granularity necessitates a dense network of these readers, which should be factored into the budget. Additionally, passive RFID devices typically require power over Ethernet, further contributing to equipment costs.
In manufacturing environments, RFID readers must be strategically placed at all entry and exit points, as well as common material storage areas. Without readers, tagged items cannot be located. The item’s location can be inferred from the last recorded entry/exit event or manually tracked using a handheld reader.
Active RFID systems, in contrast, require less expensive reader equipment—approximately ten times cheaper than passive RFID readers—as the technology is less complex. Ultra-wideband (UWB) systems, a subset of active RFID, can be costlier than passive RFID but offer exceptional positioning accuracy, often down to a few centimetres.
2. Tag Costs
A significant advantage of passive RFID is the low cost of tags, typically costing less than a dollar. However, specialised tags for metal objects are slightly more expensive due to the need for compatibility with metal surfaces. In contrast, active RFID tags like those using RF beaconing are more costly, with prices reaching up to $15 each. That said, they do offer the added benefit of seamless indoor/outdoor tracking when coupled with GPS technology, which could make them worth the price for some.
Additionally, the cost of maintaining the batteries in active RFID tags must be considered. Some systems use disposable tags, while others allow for battery replacement. Both battery lifecycle costs and the associated labour should be factored into the total system costs for an active RFID solution.
3. Installation Costs
Installing passive RFID systems requires specialised expertise to direct antennas, tune equipment, configure settings, and perform connectivity tests. The readers are connected to a central server via a LAN network, which processes all RFID data on-site. Given the need for precise antenna placement and calibration, installation costs for passive RFID can be substantial.
On the other hand, many active RFID systems can be installed by an organisation’s IT team in as little as one day, simplifying the process and reducing costs. Precise placement of active readers is less critical, avoiding the need for extensive facility rework. However, do note that ultra-wideband active RFID systems can incur higher installation costs, sometimes surpassing those of passive RFID.
4. Software Costs
RFID readings are only valuable when paired with the right RFID inventory management software, which can be a significant expense. Software costs vary based on complexity and specialisation; basic tag reading software might be available as an open-source project, while integrated enterprise applications can cost thousands of dollars to maintain.
5. Ongoing License Costs
Active RFID systems often bundle licensing costs with the software, whereas passive RFID technologies typically require ongoing licensing fees for software upgrades and warrants proper budgeting. These costs can be considerable, especially for Wi-Fi-based RTLS systems where location technology is an add-on to existing Wi-Fi access points.
6. Integrator Costs
Purchasing RFID solutions through an integrator may come at a premium compared to buying directly from the technology provider. However, integrators offer expert teams to help businesses select the most suitable technology for their needs, potentially justifying the additional expense.
Conclusion
Choosing between active and passive RFID systems shouldn’t be driven solely by cost considerations, as both systems can have similar total expenses when all factors are accounted for. The key to a successful investment lies in balancing the system’s capabilities, the number of tags needed, location accuracy, and ongoing maintenance requirements. By carefully evaluating these elements, businesses can select the RFID solution that best meets their operational needs and budget constraints.