Difference between Goods and Services

Goods and services are an essential part of an economy, and these two terms are used in most of the important economic discussions.

There are many products that a consumer purchases in order to fulfill their certain requirements. These products can be either in the form of goods or services.

Goods are tangible, as in these have a physical presence and they can be touched, while services are intangible in nature.

The purpose of both goods and services is to provide utility and satisfaction to the consumer.

Goods Meaning

The meaning of goods can be expressed in terms of economics, as any item that provides utility and fulfills the needs of the consumer.

Goods can be classified as durable and non-durable based on their durability. Durable goods last for a long time while non-durable goods perish sooner than durable goods.

Goods involve transfer of ownership from the seller once it is purchased by the consumer (buyer). There is a certain time period that is required for the production of goods.

Goods due to their tangible nature have a proper structure, size and shape. They can be produced as per the market demand.

Services Meaning

Services are the intangible and non physical part of the economy that cannot be touched. They are perishable in nature as they need to be provided at a moment when requested by the consumer.

Service lacks a physical identity and cannot be owned, it can only be utilised. For e.g, when having dinner at a restaurant you can avail the concierge services but you do not own the restaurant.

In other words, there is no transfer of ownership in services and unlike goods, services cannot be stored and utilised later. Also, services cannot be distinguished from the service provider.

The following points of difference between services and goods can be discussed.

Basis of Comparison Goods Services
Nature Tangible Intangible
Transfer of Ownership Possible Not Possible
Separable Goods can be separated from the seller Services cannot be separated from the service provider
Storage Goods can be stored Services cannot be stored
Perishable Not all goods are perishable Services are perishable
Production and Consumption Goods have a significant time gap between production and consumption Services are produced and consumed together

This completes the article on differences between goods and services. To read more of such interesting concepts in Commerce, stay tuned to BYJU’S.

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