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10/29/2004
12:45 PM
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Scoping Out The Real Costs of RFID

Much of the focus surrounding the cost of RFID has been on the price of RFID chips or tags. But implementing a fully functional RFID system incurs multiple costs including technology, consulting, recurring fees and many others. By some estimates, costs for big companies can be $25 million for mandate compliance.

In addition to initial investment costs associated with RFID implementations, companies will also experience several recurring costs, including: The recurring costs for tags will vary greatly between companies. This cost is certain to be reduced over time as tag costs continue to decline. The recurring cost for technology maintenance for RFID components and related infrastructure is typically 15 to 20 percent of the acquisition cost.

The recurring cost for third-party service provider fees includes renewal fees for EPCglobal (20 percent of the initial fee) and UCCnet (same annual fee), as well as renewal fees for other optional third-party service providers, such as Transora or WWRE.

The recurring cost for additional labor is certain to be required when deploying a slap-and-ship model and will vary depending on the volume of tagging and the number of tagging stations.

The recurring cost for RFID research and development will be an ongoing cost simply due to the evolving nature of RFID today.

We believe many early adopters have underestimated the cost of implementing RFID. Moreover, quicker-than-usual technology obsolescence should require additional investments to leverage evolving capabilities.

We also believe RFID technology infrastructure costs required to capture and manage an unprecedented amount of data could grow significantly as RFID becomes more widespread.

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