While the increasing adoption of RFID has driven the costs down lot, an RFID system can still be quite tricky to implement in a cost effective way. With this in mind, choosing the right technology for the application is vital to ensure an adequate ROI (Return on Investment).
The technology (operating frequency and standard) you choose has the biggest influence on the cost. In any given RFID technology, the workload for the system to operate properly is divided between the reader and the tag. Usually, the simpler the tag is, the most complex and sophisticated the reader must be to read it - and this easily translates in the "cheap tag, expensive reader - cheap reader, expensive tag" rule of thumb.
Even taking into account the cost distinction between passive, semipassive and active tags, in general the level of sophistication required to read passive tags calls for more expensive readers, while with active tags the cost of the reader is much lower. So, when "designing" your system, one of the first things to take into account is how many tags you will need - and if you can reuse them in some way. Also, consider the unit price for a tag is strongly dependent on the quantity - the most cost effective option is to buy labels in rolls.
As a point of reference, the most widespread UHF EPC Gen2 inlays (logistics and warehousing applications at item level) can cost less than 10p per tag (prices on an order of about 10.000 pieces - April 2013), while the price for a matching industry grade reader for portal applications is about £1000 (excl VAT). On the other side of the scale it is easy to be quoted over £100 for 100 tags.
With regards to the frequencies, LF is the cheapest technology overall, mostly because it is the oldest, simplest one and more widespread use - car immobilizers and animal tagging come to mind, calling for large volumes and very cheap readers (a reader can cost less than £10). However, LF extremely low performances make is suitable only in niche applications.
HF comes second because of the large volumes requested by fare payment systems - the price dropped so much that NFC readers have started being integrated with mobile phones (but industrial grade readers are still quite expensive).
UHF readers are usually the most expensive in the lot, but the advantage is in term of reading range, versatility and low tag cost.
With regards to the distinction between passive, semi-passive and active tags, passive tags wins hand down cost-wise, with semi-passive and active tags costing about 20 times as much - without considering the need of replacing tags every few years when the battery is flat. This makes battery powered tags something you should consider only when the extra range is indispensable for the application.
With regards to standards, widely used standardised technologies are usually much cheaper than proprietary technologies, especially in the long run. This partly due by the fact they are in general sold in larger volumes, but also that you can buy both tags and readers from different manufacturers. This, as often does in other sectors, opens up free market competition driving down the cost. A related advantage is that this gives you better guarantees about how long a particular technology will be available on the market, allows you to change your suppliers every time a cheaper or improved version becomes available and allows interoperability between different companies in the same supply chain.
Once you have chosen the technology, other factors that can affect the cost are:
- The tag packaging: when you buy a tag, it can be supplied with different substrates or packaging, ranging from a cheap tag on a sticky substrate (label) to considerably expensive tags encased in various material to work in harsh environments, to extend the lifespan or to be suitable for on-metal mounting;
- The reader portability: do you need fixed or portable readers? Fixed readers are usually more powerful (longer range/greater accuracy) and cheaper than the portable counterparts;
- The reader ruggedness: if your application is meant to work outside or in dusty/wet environments you will need a ruggedised reader, able to withstand harsher condition. However this will obviously have an implication on the cost of the reader, especially on mobile ones.
Lastly an important consideration is to keep in mind that an RFID system does not just include readers and tags. For most applications, you will need to setup the entire infrastructure to go along with it (computer, network, servers, backup system, software, cabling, installation etc) - and the cost of the latter (if setup from scratch) can easily largely outweigh the cost of the RFID technology used in the system!