Goods are tangible products offered by businesses to customers, and in return, customers pay an agreed amount. On the other hand, services are any activities or duties performed and provided by individuals. Services have no physical features, and the consumers are not able to feel their impact or appeal before consumption or purchase. Both goods and services have unique features that differentiate them. There are special documents such as goods and services manual those can help identify them. So, what is the difference between goods and services in economics?
Goods are physical things, which can be touched and seen. One can buy bread or try on clothes. Goods are tangible; once a buyer buys the good, he owns it. A person can know what they have bought and be able to quantify its quantity, size, and quality. Products can be easily displayed, allowing the consumer to know what they purchase.
Services, however, cannot be touched, seen, or tasted. They are said to be intangible, meaning a service is consumed or experienced when provided. The intangible nature of services makes it difficult for consumers to know what they will get after they have purchased it. The intangible feature makes the user lack confidence of the service. Intangibility also means that services cannot be displayed and consequently pricing becomes difficult.
Goods once produced are sold, and after the purchase, the consumer gets the physical possession of the product. Goods are easily transferable from one location to another. The producer may be far away from the consumer during the good purchase, but for services, a service provider needs to be in the buyer’s presence. Production and consumption of a service occur at the same time. Teachers need to be present for teaching to occur. It illustrates that the service of education cannot get separated from the teacher. Services are inseparable from their providers, while goods are separable from the producer.
After production, goods can get stored for future use. Unlike goods, storage of services is impossible. They cannot be preserved for later use because they depend on time and are perishable. Performance and consumption of services take place concurrently. Services not consumed, tend to expire or go to waste. A service once produced cannot be resold or returned, showing that they are highly perishable. For example, empty seats on a plane cannot get resold or moved to the next flight.
Services are argued to be unique, only existing once and the possibility of a repetition, in the same way, is minimal. The variability of services occurs as a result of different people offering the services. Everyone is different, and it is possible that people will give different answers to the same inquiry. Even after training, setting standards and quality assurance the outcome produced can be unpredictable. In contrast, goods can be produced to meet required specifications with little or no variability. The defective goods can get scrapped or fixed. Services are therefore vulnerable to changes and how they get delivered is not always consistent, while the production of goods applying the same procedure and materials will result in consistency.
Before the consumption of a good, there exists a time gap between production and consumption. The good needs first to go through production then after consumption. Customers are not involved in the manufacturing process, and they can only see and touch the final product. On the other hand, services have no such time gap. They are produced and consumed at the same time. The service personnel provide the service to the consumer. The consumers are then involved in the production through their engagement.
There are many apparent differences between goods and services. Where services are activities intangible in nature, with no observable characteristics, and cannot be stored. Their consumption being simultaneous to production and cannot move physically. Goods are, however, physical, with their features observable, and capable of storage. Consumption occurs after production, and they can be moved or transported.