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Background Our objective was to assess whether modifications to a customized targeted RNA sequencing (RNAseq) assay to include unique molecular identifiers (UMIs) that collapse read counts to their source mRNA counts would improve quantification of transcripts from formalin-fixed paraffin-embedded (FFPE) tumor tissue samples. The assay (SET4) includes signatures that measure hormone receptor and PI3-kinase related transcriptional activity (SETER/PR and PI3Kges), and measures expression of selected activating point mutations and key breast cancer genes. Methods Modifications included steps to introduce eight nucleotides-long UMIs during reverse transcription (RT) in bulk solution, followed by polymerase chain reaction (PCR) of labeled cDNA in droplets, with optimization of the polymerase enzyme and reaction conditions. We used Lin’s concordance correlation coefficient (CCC) to measure concordance, including precision (Rho) and accuracy (Bias), and nonparametric tests (Wilcoxon, Levene’s) to compare the modified (NEW) SET4 assay to the original (OLD) SET4 assay and to whole transcriptome RNAseq using RNA from matched fresh frozen (FF) and FFPE samples from 12 primary breast cancers. Results The modified (NEW) SET4 assay measured single transcripts (pER/PR (p=0.002) more reproducibly in technical replicates from FFPE samples. The modified SET4 assay was more precise for measuring single transcripts (Rho 0.966 vs 0.888, pER/PR (Rho 0.985 vs 0.968) or PI3Kges (Rho 0.985 vs 0.946) in FFPE, compared to FF samples. It was also more precise than wtRNAseq of FFPE for measuring transcripts (Rho 0.986 vs 0.934, pER/PR (Rho 0.993 vs 0.915, p=0.004), but not PI3Kges (Rho 0.988 vs 0.945, p=0.051). Accuracy (Bias) was comparable between protocols. Two samples carried a PIK3CA mutation, and measurements of transcribed mutant allele fraction was similar in FF and FFPE samples and appeared more precise with the modified SET4 assay. Amplification efficiency (reads per UMI) was consistent in FF and FFPE samples, and close to the theoretically expected value, when the library size exceeded 400,000 aligned reads. Conclusions Modifications to the targeted RNAseq protocol for SET4 assay significantly increased the precision of UMI-based and reads-based measurements of individual transcripts, multi-gene signatures, and mutant transcript fraction, particularly with FFPE samples.