Difference Between Goods and Services

Goods vs Services

If you look at the money spent by you every month on your family budget, you can easily bifurcate into money spent on goods, and the money spent on services. All the utility bills such as gas, water, and electricity are the services provided to you by different service providers whereas all the grocery apart from gadgets or appliance you purchase from the market classify as goods. The study of all the goods and services produced by a country is an important concept in the study of economics and together they form an important economic indicator known as Gross Domestic Product of a country. There are differences in goods and services that will be discussed in this article.

The mobile you purchase from the market is an example of goods whereas the contract you sign with a company to be able to make or receive calls through it is an example of services. The stove that you use for cooking food at home classifies as goods whereas the gas cylinder you buy every month or so to use as a fuel is an example of services. Similarly the refrigerator you buy from the market is goods whereas the electricity that is needed to run it is referred to as services. I think this is enough to clarify the differences between gods and services. The burger you eat at Mc Donald’s or the coke you drink in a road side stall is an example of pure goods. Examples of pure services are the services of provided by doctors, lawyers, insurance agents, and so on.

It is thus clear that goods are products that are tangible and those that you can hold in your hands or at least see physically. On the other hand, services are mostly intangible and in most cases cannot be seen in physical form. In simple words, services denote an act of doing something for someone whereas goods are products that are sold and bought in a market. Service part of any product usually begins after the purchase. You buy an air conditioner and then are dependent on the services provided by the seller for the maintenance and repair of the product.

A hot debate has been raging in the world to have a clear cut differentiation between goods and services and for inclusion of services in world trade which had been concentrating upon goods traditionally. This has led to inclusion of services in provisions made by GATT, the world body that has been deliberating and holding discussions for the last so many years.

In brief:

Goods vs Services

• Goods are tangible while services are intangible

• The quality of goods, once produced, does not vary. However, the quality of services is dependent upon service provider and may vary greatly

• You own goods but you utilize services

• Goods are transferable (such property and electronic goods and jewelry) while services are not

• Services have impact on sale of goods but goods cannot affect sale of services.