How does goods differ from services

For example a barber or a chartered accountant are giving individual services. Airlines on the other hand have airplanes which is a product but travelling by airplanes is a service airlines are one of the most competitive service sectors today.

Thus the difference between goods and services is based on tangibility. Where goods are tangible in nature, services are mostly intangible. The classic rules which defined services were intangibility , heterogeneity , perishability and variability.

However, although the old rules are applicable even today, several new rules have been added to define the difference between goods and services. When buying a service, the service ownership is not transferred to the end customer. If you buy a car then the car is yours. But if you buy a ticket for an airline, then the airline is definitely not yours. How do you measure service? In a restaurant, the dish can be measured, but the efforts gone in making the same dish by two different chefs cannot be measured from the customer end.

Same goes for large service corporates like Accenture and Infosys. The time and effort gone for giving service to the customer is intangible. Both ownership and intangibility are old school differences between goods and services. When comparing the difference between goods and services we have to look at the involvement of customer as well. In services involvement of customers is much more than in products. The same goes for vending machines as well as for self service restaurants.

In case of products, mass manufacturing is common. And mass manufacturing means uniformity. However, services involve a lot of manual labour due to which the quality may vary each time. Uniformity in services is a factor which each service owner tries for. For example — The major challenge of food chains like Subway , Pizza hut and dominos is to give the same quality over and over again, whereas in local restaurants the quality of food may vary time to time from the same restaurant.

As quality varies from time to time and the involvement of customer is maximum, evaluation of different services becomes tougher. Thus we can evaluate that HDFC service is better because they have more reach to the end customer. But how do we evaluate how a barber cuts your hair. Variability Identical Diversified Storage Goods can be stored for use in future or multiple use.

Services cannot be stored. Production and Consumption There is a time lag between production and consumption of goods. Production and Consumption of services occurs simultaneously. Goods refer to the tangible consumable products, articles, commodities that are offered by the companies to the customers in exchange for money. They are the items that have physical characteristics, i.

It is capable of satisfying human wants by providing them utility. Some items are made for one-time use by the consumer while some can repeatedly be used. Goods are the products which are traded on the market.

There is a time gap in the production, distribution, and consumption of goods. When the buyer purchases goods and pays the price, the ownership is passed from seller to buyer. Products are manufactured in batches, which produces identical units.

In this way, a particular product offered by the company will have the same specifications and characteristics all over the market. It is an activity carried out for someone else. They can only be delivered at a particular moment, and hence they are perishable in nature. They lack physical identity. Services cannot be distinguished from the service provider. The point of sale is the basis for consumption of services. Services cannot be owned but can only be utilized.

Service receiver should fully participate when the service is provided. Evaluation of services is a relatively tough task because different service providers offer the same services but charges a different amount.

It may be due to the method they provide services is different or the parameters they consider in valuing their services vary. Generally, companies keep a stock of goods with itself to fulfill an urgent requirement of goods. It also keeps track of the quantity of goods at the beginning and the end. In contrast to services are delivered as per the request of the customer itself.

Great content. Thanks for such a nice description. Very simple but rich content as economics terms. I have found it very useful to me, as I am researching on how imported services can be taxed in the cross border transactions, as we do on goods.

Things like; Customs valuation, inspection of imports, quantification of imports service , quality of imports of different services , etc. This page is so helpful to me in so many ways. I found it easier to understand because of the full explanation, Thanks a lot.

I learned a lot in that explanation between goods and services. Full of explanation and learnings and I am very thankful for that. Especially the comparison chart, I gain more knoledge about goods and services.