A method is provided for optimizing the design parameters of a RFID tag for use with a RFID reader in a RFID system. In the method, a desired frequency band that the RFID tag will operate in is chosen. Additionally, a maximum acceptable cost for the RFID tag, a minimum acceptable data range for the RFID tag and a minimum operating voltage for the RFID tag are chosen. For a given cost, an optimal data rate is calculated by varying a carrier modulation period of an interrogation signal generated by the RFID reader and antenna capacitance of the RFID tag. Next, an optimal range for a given operating voltage is calculated using the optimal data rate.