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IDTechEx Chairman predicts price-sensitivity curve for RFID

Aug '06
Dr Peter Harrop
The correlation between the volume and pricing of RFID tags has been a much debated topic in recent times. IDTechEx Ltd Chairman Dr Peter Harrop's forecast on pricing for the next ten years and his justification behind the figures.

Lately, some RFID tags have been sold at high profit and others literally given away. Yet more have been sold at a considerable loss by operations of doubtful viability and all this conspires to make it seem that there is no obvious price-volume sensitivity curve for RFID tags.

However, some numerate view is essential for those planning to sell equipment making RFID tags, those making the tags themselves and those intending to use them. Fortunately, clarity is possible if we simplify the problem.

The big picture
First consider the overall situation. In IDTechEx projections for the next ten years, the average tag price expected is illustrated in the diagram below. This includes active and passive tags of all shapes and sizes and among the passive tags are ones that cost up to $8 each to meet very high military and aerospace requirements.

At the other extreme, it includes some tags printed directly onto products and packaging in 2016. The dashed line is a rough indication of the lower limit of price by year and quantity, excluding giveaways and highly loss-making commitments. For example, a shakeout is due among those supplying highly loss-making straps, inlets and labels for pallets and cases.

The price-volume sensitivity for RFID in the form of high-volume labels is lower than the all-embracing curve shown above. This is because labels address the more price sensitive markets in the main, these being the ones with potentially the highest volumes. However, the price-volume curve for high-volume RFID labels should be no lower than for anti-theft EAS labels for reasons we shall give below.

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