Difference between goods and services is one of the basic topics discussed in subjects such as economics. If you look at the money spent by you every month on your family budget, you can easily bifurcate into money spent on goods, and the money spent on services. All the utility bills such as gas, water, and electricity are the services provided to you by different service providers whereas all the grocery apart from gadgets or appliance you purchase from the market classify as goods. The study of all the goods and services produced by a country is an important concept in the study of economics and together they form an important economic indicator known as Gross Domestic Product (GDP) of a country. There are differences in goods and services that will be discussed in this article.
The mobile you purchase from the market is an example of goods whereas the contract you sign with a company to be able to make or receive calls through it is an example of services. The stove that you use for cooking food at home classifies as goods whereas the gas you buy every month or so to use as a fuel is an example of services. Similarly, the refrigerator you buy from the market is goods whereas the electricity that is needed to run it is referred to as services. These examples must have given you an idea what a good is and what a service is. The burger you eat at McDonald’s or the coke you drink in a roadside stall is an example of pure goods. Examples of pure services are the services of provided by doctors, lawyers, insurance agents, and so on.
What are Goods?
It is thus clear that goods are products that are tangible and those that you can hold in your hands or at least see physically. Goods are products that are sold and bought in a market. Service part of any product usually begins after the purchase. You buy an air conditioner and then you are dependent on the services provided by the seller for the maintenance and repair of the product. The ownership of a good is transferable. That means, once you buy a good, it belongs to you. For example, you buy a motorbike. Then, the motorbike belongs to you as the ownership is transferred to you by the seller. Then, we can look at the customer involvement in the production of goods. The involvement of the customer in producing goods is very low. For example, if you take a mobile phone, the company decides how they are going to design it. Sure, customers can say what features they would like to see in a new phone, but not all those features are included in the final product. The company decides what is best and produces. The evaluation of a good is easy. The good is tangible, and you can make a criterion and evaluate a good according to that.
Goods are tangible.
What are Services?
On the other hand, services are mostly intangible and, in most cases, cannot be seen in physical form. In simple words, services denote an act of doing something for someone. However, the ownership of the service is not transferable. For example, think that you buy a train ticket. That does not mean the train belongs to you. It simply means you get to use the service provided by the train. That is it. No ownership is transferred. When it comes to customer involvement, in services customers are more involved. For example, think about an ATM machine. ATM machine needs customer’s full participation to provide its service. Evaluation of different services is difficult. Different individuals or companies who provide the same service may provide it using different methods. So, having one criterion to decide whether a service is good or not, is hard. For example, take two barber shops. One barber shop has all the new equipment. The other does not. However, both get the same amount of customers. So, the service must be good in both. Nevertheless, you cannot make a common criterion to evaluate both.
Train provides a service.
What is the difference between Goods and Services?
• Goods are tangible while services are intangible.
• The quality of goods, once produced, does not vary. However, the quality of services is dependent upon the service provider and may vary greatly.
• You own goods, but you utilize services.
• The ownership of goods is transferable. The ownership of services is not transferable.
• The customer involvement in services is remarkably higher than in goods.
• Evaluating goods is easier than evaluating services.
• Goods have inventories. These inventories show how many goods were there, how many sold and how many remain. However, services do not have inventories as a service is provided only upon request. So, the production process begins with the order.
• Time is more important in services than in goods. This is because, in a service, production and consumption happens at the same time. If the service is late, that is a delay. Goods do not have this problem as they are already produced.
• Services have impact on the sale of goods, but goods cannot affect the sale of services.
Images Courtesy:
- Goods by CC BY-SA 3.0)
- British Rail Class 390 Electric multiple unit train in Virgin Trains livery by LennartBolks (CC BY-SA 3.0)