How Much Should You Spend on Asset Tags?

Knowing that AMI AssetTrack supports any data capture technology, an AssetTrack user recently asked me how much he should spend on asset tags and should they do barcode, passive or active RFID.  I responded, “it depends.” But in more fully answering his question, we explored some important basics to be considered before committing to an RFID investment. I thought I’d share those.


Barcodes are straightforward.  Everyone knows how they work. They were magic forty years ago, but not today so I’ll move on.


RFID tags come in two basic forms:  passive and active. Passive tags have tiny internal, unpowered chips that are programmed with data, typically the ID of the asset for asset tracking purposes, but they can store additional data as well. These passive chips must be near a “reader” to be read. The reader itself powers the chip, which means the passive chip lasts forever. Often, passive RFID tags also sport traditional barcodes so they can be read with both an RFID reader and – if necessary – a barcode scanner.

Passive RFID

Passive RFID is a standard, meaning you can mix and match tags with reader hardware. This is an important distinction from active.

The advantages of a passive RFID tag over a barcode are range and speed. Under ideal conditions, a passive RFID tag can be detected and read from as far as 30 feet between the tag and the scanner, and you don’t need line of sight, so you can detect tags you can’t access easily with a barcode laser.

…armed with a clearer understanding of the advantages and disadvantages of each tagging technology, it’s possible to make an informed choice…

Passive RFID scanners can take the form of handheld units or fixed-position readers set up at entrances and exits. In either case, it’s unnecessary to scan each piece of inventory individually. A pallet of tagged boxes passing through a portal-mounted reader, for example, records all the boxes simultaneously. (AssetTrack records that information and updates the database accordingly.)

The next level up in terms of performance (and cost) is active RFID tags. As their name implies, active tags are internally powered so they can broadcast a low level radio “beacon” carrying the asset description. These radio signals have a range of hundreds of feet, and so can be detected by a single centrally located reader. For example, a single reader in the ceiling of a warehouse can detect thousands of assets, and alert the database whenever an asset enters, changes zones or disappears.

Active RFID

Active RFID is proprietary so, as of today, you cannot mix tax and reader technology. You get readers from the same people who sell you the tags.

Also, since active tags have batteries, they don’t last forever.  Figure 5-7 years for a standard IT active asset tag, to be safe.

Let’s look at a simple cost analysis of the three tagging technologies:

1. Barcode.

Offers the lowest cost per tag (currently about 10¢), but requires a handheld scanner and a human being to scan each asset individually.  Lowest cost but requires the most labor and is the most error prone.

2. Passive RFID.

There are many different passive tags, but for metal IT assets, figure a passive RFID tag will run about ten times as much as a barcode. A passive system still requires a human being with a handheld or cart-mounted reader, but only to pass near the assets rather than scanning them individually. Fixed portal readers currently run about $3,500 and scan tags automatically as they pass through doorways.  Nevertheless, you need assets to move around and human beings to scan them for the asset to be verified.  It requires human intervention, but ten times less human labor than barcodes.

3. Active RFID.

Costs are declining, but currently active tags are about ten times as much as passive tags, or one hundred times a barcode tag. But whereas the cost of tag deployment is higher, the cost of readers is lower, and only one fixed reader is necessary per zone, automatically tracking assets in real time. Furthermore, no human intervention is necessary.  You completely eliminate humans from the equation.



So I think you can now understand my “it depends” response. Each organization has a unique profile of asset receiving, distribution and volume.  And, of course, there is always the issue of capital expenditures. However, armed with a clearer understanding of the advantages and disadvantages of each tagging technology, it’s possible to make an informed choice as to which one (or combination) provides the best return on investment.


Thomas Watson - CEO of AMIAuthor: Tom Watson

Tom Watson is AMI’s President and CEO. He began his career in high tech in 1996, as a software engineer for his own software company. After a subsequent stint at IT Asset Management firm Micropath as senior architect for that company’s asset tracking system, he founded AMI to develop hardware asset tracking technology solutions for enterprise IT Asset Management customers.

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