How Do Services Differ from Goods

Surprisingly, many do not understand the difference between a service and a good. Lets dive in.

First, services are not tangible and goods are. Goods are a physical item or at least a digital file such as software. An example, of service would be the post office delivering your mail. They might deliver a tangible item but the act of transporting the item is a service. At the same time, the act of creating software can be described as a service while the software itself is a good.

Second, services typically require some degree of interaction. For example, if you would like someone to create a website or software for you you will need to talk to them and describe what you want. While many products can be found complete, as is, in brick and mortar stores such as Walmart or an ecommerce stores such as Amazon. Someone, such as a car manufacturer can create a product without ever discussing it with you or any customer and then put that product on the market for you to buy assuming you like the product that was created. This is mostly how Apple Inc. founder Steve Jobs operated. He viewed his products as works of art. He made his art and you either liked it or you did not. Jobs had no placed for focus groups or reviews of his products. He simply made what he thought was a perfect piece of art and history shows most of his art was wildly successful.

Third, much like the end of our second point, services vary to the customer’s needs while goods are created to fit specific needs or a market. When a service is being preformed most likely that service will provide the purchaser exactly what they need or requested. While a good would have been created to fill a market in the assumption of a need to be filled.

There are more points that can be made distinguishing the difference between a service and a good. Some have suggested a service appeals to the five senses but this can also be said about many goods. For example, a candy apple is a good, but it appeals to my eyes it is attractiveness, the smell of all the sugar as I approach, taste as I bite into it, hearing as it makes the desired crunch sound, and feeling as I struggle to crack the candy coating. Most importantly, typically a service is an intangible while a good is a tangible item.