RFID holds great potential for VARs and system integrators, especially those who have traditionally sold barcode and other auto-ID systems. Currently, there are over 2,000 companies required to install RFID, and hundreds more with needs for the technology. Industry estimates see the market topping $3 billion by 2010.

Before deploying RFID VARs must fully understand it. Failure to ensure your company is properly positioned to compete in this new space will prove costly. The following tips will help ensure a successful and profitable installation.

1. RFID Knowledge is Key. While similar, there are differences between RFID and barcodes that require varying skills to sell and install it. Knowledge of how to shape and manipulate radio fields is vital, as is experience in process automation and supply chain. Setting up a test facility will help solve any radio propagation issues.
2. RFID is Not a Technology Sale. Whoever owns the application owns the sale. RFID is a technology that can speed up data collection and improve product visibility, but it requires proper software that manipulates the volumes of data into meaningful business information.
   Look at your current application offerings and determine if you can make them work with RFID or if you need to develop new applications. Creating the right value proposition for your customers will save them money and streamline current processes.
3. Know How to Make a Profit. RFID services, to date, have been the most lucrative, often running 40 percent or more of the total project. VARs have been able to reap large profits by performing tasks such as site surveys, in-house product testing, system installation, process analysis, and overall project management.
   RFID software can also command a significant portion of the revenue. Both custom written and packaged solutions can contribute up to 35 percent of the deal. Additionally, hardware has maintained decent margins as customers are willing to pay higher prices to get the best performing equipment.
   Tags, however, have taken the opposite route. Cut rate pricing has driven RFID tag prices (and profits) down. Though disposable RFID labels represent an annuity year after year, many RFID VARs have turned to selling re-useable tags that command a higher price but offer their customers a better ROI in multiple read environments.
4. Offer Options. Not all RFID systems are the same. To cover the field you should choose to carry at least one product from the two major classifications:
   • Active RFID systems provide the longest read distances, often more than 100 feet. The tags are costly ($20-$50 each) and contain a battery that will need to be replaced after a few years, but they also allow you to triangulate and determine the exact location of your object. Due to their high cost, they are most often used for very high value items that need to be tracked from a distance.
   • Passive RFID systems have read distances up to 40 feet. Tags do not require a power source and the systems typically have read speeds of hundreds of tags per second. Tags are inexpensive ($0.25-$0.70) but are sometimes susceptible to interference from metal and liquids. Passive RFID is being implemented for a variety of business applications including item level retail, inventory management, and asset tracking. Recent advances have vastly increased the applicability for passive RFID systems.
5. Design For The Future. Design the system for growth, even if the customer starts small. Make sure it can scale as the number of items and amount of information being managed increases by having software that can handle the load and ensuring there is enough network and processing capacity to cover additional data.

With the proper planning and execution, RFID can mean valuable growth for any VAR.