The Difference Between a Service and a Good

What is the difference between a service and a good? When answering questions like these, I attempt to look at things from a simplified view. I try to stay away from complexity and decompose or deconstruct the parts of an answer to its most basic form. As a result, for me the difference between a service and good is very simple. A service is intangible (an abstraction or an idea) while a good is tangible (having physical characteristics). In terms of the creation or production of each, they are both “manufactured” or “created” using the exact same approach. Raw materials are “processed” into a finished output. So both services and goods could be considered “products” of a manufacturing “process.” In this way services and goods are the same thing.

The difficulty arises for many people when it comes to the idea of “manufacturing” services. Because they can see, taste, smell or feel a service as it makes its way through the “manufacturing” process, they end up thinking or believing that a service cannot be the same as a good. The manufacture of a service is not done by ordinary machines rather it is created and delivered by people (often through thinking or knowledge work). The inputs to the creation of a service are needs, wants, desires, requirements and ideas. Given these inputs the output will also be intangible and abstract. One way to think of a service is “work done for other people.” When you think of a service as a set of activities done to aid or assist someone else in their work, rather than some tangible item (a good) then you begin to see that it is difficult for a machine or technology to deliver a service. We use technology and machines to help us deliver a service, but in the end a service is an abstract group of activities we do for others.

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