In economics, goods and services are often pronounced in the same breath. These are offered by the companies to the customers to provide utility and satisfy their wants. At present, the success of the business lies in the combination of best quality of goods and customer oriented services. ‘Goods’ are the physical objects while ‘Services’ is an activity of performing work for others.
Goods implies the tangible commodity or product, which can be delivered to the customer. It involves the transfer of ownership and possession from seller to the buyer. On the other hand, services alludes to the intangible activities which are separately identifiable and provides satisfaction of wants.
One of the main difference between goods and services is that the former is produced and the latter is performed. To know more differences on the two, take a read of the article presented to you.
Content: Goods Vs Services
|Basis for Comparison||Goods||Services|
|Meaning||Goods are the material items that can be seen, touched or felt and are ready for sale to the customers.||Services are amenities, facilities, benefits or help provided by other people.|
|Transfer of ownership||Yes||No|
|Evaluation||Very simple and easy||Complicated|
|Return||Goods can be returned.||Services cannot be returned back once they are provided.|
|Separable||Yes, goods can be separated from the seller.||No, services cannot be separated from the service provider.|
|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 goods occurs simultaneously.|
Definition of Goods
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.e. shape, appearance, size, weight, etc. 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.
Example: Books, pen, bottles, bags, etc.
Definition of Services
Services are the intangible economic product that is provided by a person on the other person’s demand. 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. You can understand this by an example: If you buy a ticket for watching a movie at the multiplex, it doesn’t mean that you purchased the multiplex, but you have paid the price of availing services.
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.
Example: Postal services, banking, insurance, transport, communication, etc.
Key Differences Between Goods and Services
The basic differences between goods and services are mentioned below:
- Goods are the material items that the customers are ready to purchase for a price. Services are the amenities, benefits or facilities provided by the other persons.
- Goods are tangible items i.e. they can be seen or touched whereas services are intangible items.
- When the buyer purchases the goods by paying the consideration, the ownership of goods moves from the seller to the buyer. Conversely, the ownership of services is non-transferable.
- The evaluation of services is difficult because every service provider has a different approach of carrying out services, so it is hard to judge whose services are better than the other as compared to goods.
- Goods can be returned to or exchanged with the seller, but it is not possible to return or exchange services, once they are provided.
- Goods can be distinguished from the seller. On the other hand, services and service provider are inseparable.
- A particular product will remain same regarding physical characteristics and specifications, but services can never remain same.
- Goods can be stored for future use, but services are time bound, i.e. if not availed in the given time, then it cannot be stored.
- First of all the goods are produced, then they are traded and finally consumed, whereas services are produced and consumed at the same time.
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. In short, the production of services depends on the customer’s demand. Both are subject to tax like Value Added Tax (VAT) is levied on goods while service tax on services provided.
Sometimes products offered by the companies in such a way that it ‘s hard to segregate goods and services like in the case of a restaurant, you pay for the food you eat as well as for the add-on services of the waiters, chef, watchman and so on.