I asked a technical friend this question, because I did not know the answer. The interesting bit is that a simple question gives us back a guide to IoT pricing strategy. Here is our feedback from the eminent Mr. Holmes; “Because most RFID tags aren’t “smart,” they’re just responsive. No battery, no processor, no cloud. Just a whisper in the electromagnetic wind.”
“It’s not Internet of Things. It’s Identity of Things, a bridge technology between barcodes and full connectivity.”
Mr. Holmes
Most common RFID tags (like the ones in clothing stores, keycards, or boxes) are passive. They have no power source. They sit there, waiting for a reader to activate them with radio waves. They reflect back a tiny, pre-coded signal (like a serial number or ID). They don’t think, they don’t measure, and they don’t connect to the internet. The result is mass produced, paper-thin, often disposable, printed, embedded, or stuck anywhere.
True IoT devices usually have a microcontroller (brain), Connectivity (Wi-Fi, LoRa, NB-IoT, Zigbee, etc.), sensors (to detect temperature, motion, gas, light, moisture…), sometimes batteries or energy-harvesting hardware, a software stack for encryption, reporting, updating. Even “cheap” IoT sensors tend to be €5–€50 each, depending on type, connectivity and function. We begin to see that each extra communication layer you add costs extra in time, in processing power and in supporting the overall system, ultimately leading to higher cost.
If you want to track an object’s identity, log a point-in-time event (entry, exit, scan) and want to avoid using a power source, RFID is perfect – simple, cheap and effective.
Summary Comparison:
| Feature | RFID (Passive) | IoT Device |
|---|---|---|
| Power | None (uses reader energy) | Battery or wired |
| Cost | ~$0.01–$0.50 per tag | ~$5–$50 per device |
| Function | ID only (scan + serial) | Full sensing + connectivity |
| Use Case | Access cards, asset tracking, supply chain | Environmental sensing, remote monitoring, automation |
| Brain Power | Zero (no computing logic) | Microcontroller or SoC |
