Difference Between Goods vs Services
Economy is one of the basic parts of human existence, be it in developed, developing, or under-developed countries. Its purpose is to manage human needs primarily for the preservation of life. To understand economics, you need to know some of the jargon and their meanings.
In this post, we will discuss two of the most common economic phrases that are somewhat similar. We will define and explain the difference between goods and services even though they are often pronounced in the same breath most of the time.
Definition of Goods
Goods are defined as any consumable material that can be offered for sale in exchange for money. Most of the time, anyone (the customer) who wants to purchase a certain consumable material is expected to reach out to the seller in the marketplace (which may be online or at a physical location).
Once it is confirmed that the product is available, the customer is expected to make a payment in exchange for the material. At this point, the ownership of the product has been passed from seller to buyer.
In the services vs goods comparison, it is obvious that the latter has physical properties that make them tangible in nature. They can be seen and weighed, have a certain shape and dimension, and are valuable in the sense that they are capable of solving human problems.
Note that producing a product takes some time. It is a process that involves three different stages – the production, distribution, and consumption stages. If it is a commercial product, the manufacturers would usually make a whole batch to have several identical units available to customers.
Definition of Services
A service is defined as an intangible economic product provided by a person on demand in exchange for money. In the goods vs services comparison, it is obvious that these two economic products offer some value to humans and are made available to them if they are willing to pay. The only difference is that the former is tangible in nature and the latter is not.
A person that provides an intangible valuable product to another is known as a service provider, and their services cannot be separated from them, nor can it be stored at a place. To get this type of value, the customer would have to place a demand, and the provider would have to be physically present to redeem the demand in exchange for a certain amount of money.
Speaking of ownership, it is not possible to transfer ownership of the provider’s skills or work materials to the customer. The receiver only pays for the work done and that is all he or she gets. Also, it cannot be returned assuming it is not good enough. The provider may offer additional services, but that is all.
Main Differences Between Goods vs Services
So far, we have explained what these terms are and pointed out some of their features. In this section, we will go into the details of how they differ from one another.
|Basis of Comparison||Goods||Services|
|Definition||Any consumable material that can be offered for sale in exchange for money||An intangible economic product provided by a person on demand in exchange for money|
|Storage||Can be stored||Cannot be stored|
|Perishability||May or may not be perishable||Not perishable|
|Ownership||Can be transferred from seller to buyer. It may also be returned after purchase||Cannot be transferred or returned|
|Variability||Can be produced in batches of identical units||Diversified|
Difference Between Goods and Services: Conclusion
Both of these terms have economic values and are gotten in exchange for money, but they differ in various ways, most of which have been mentioned above. In summary, the difference between services and goods can be seen in their meanings, tangibility, ownership, variability, and so on.
Finally, a company that produces goods can manufacture a high number of goods with limited human involvement, especially if there are machines involved. But that is not the case with a company that renders service for payment. For every order they get, they would need to mobilize at least one skilled person to redeem the order.