difference between service and product

The Difference Between Services and Products in Business

As a business owner or entrepreneur, it is essential to understand the difference between services and products. While both products and services can be a source of revenue for a company, they differ immensely in terms of the way they are offered, consumed, and priced.

What are Products?

Products refer to tangible items that are created through a manufacturing process. They can be physical or digital and are offered to customers to satisfy their specific needs or wants. Examples of products include food items, electronics, clothing, books, and software.

One of the key aspects of products is that they are standardized and can be mass-produced, which means their unit costs can be lowered over time, making them more profitable. Additionally, products can be marketed and sold globally, giving companies an opportunity to reach a vast customer base.

What are Services?

On the other hand, services are intangible offerings that typically involve some form of expertise, skill, or labor. Services are typically personalized and customized to meet the individual needs of customers. Examples of services include education, healthcare, financial planning, consulting, and hairstyling.

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Unlike products, services cannot be standardized, meaning they cannot be mass-produced in the same way as products. This means that service costs are generally higher than product costs because they are customized, and they rely on the skills and expertise of individual service providers. Additionally, since services cannot be stockpiled, companies must continually market and reach out to new customers to maintain their revenue.

The Main Differences Between Services and Products

There are several significant differences between services and products, including:

– Tangibility: Products are tangible, while services are intangible.

– Customization: Services are personalized and customized, while products are standardized.

– Production Process: Products are manufactured through a standard production process, while services require specialized skill and expertise.

– Stockpiling: Products can be stockpiled and sold later, while services cannot.

– Pricing: Services are generally more expensive because they are customized, while products are lower-priced because they are standardized.


Understanding the difference between services and products is vital for any entrepreneur or business owner hoping to maximize their revenue streams. While both services and products have their unique advantages, companies must choose the right offering for their target audience and their business model. Ultimately, a successful business will find a balance between providing high-quality goods and services while maintaining profitability.

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Table difference between service and product

Aspect Product Service
Definition A tangible item that can be bought and sold An intangible activity or experience that is provided to customers
Storage Can be stored in a warehouse or inventory until sold Cannot be stored, delivered or consumed over a period of time
Production Made in a factory or production facility Produced on site or provided by staff directly to customers
Delivery Shipped or delivered to customers Provided on location or through communication channels
Tangibility Physical product that can be touched and felt Intangible service that cannot be touched or felt
Customization Can be mass produced or customized to some extent Can be fully customized to meet individual customer needs
Quality Control Quality can be controlled at the production facility Quality depends largely on the individual or team providing the service
Outcome Customer satisfaction based on the quality, value and utility of the product Customer satisfaction based on the quality, value and experience of the service