Product vs. Service

What's the Difference?

Product and service are two distinct concepts in the business world. A product refers to a tangible item that is manufactured or produced and can be bought and sold. It is a physical entity that can be touched, seen, and used by consumers. On the other hand, a service is an intangible offering that is provided by individuals or businesses to fulfill a specific need or desire of customers. Services are actions or performances that are performed for the benefit of others. While products are typically mass-produced and can be standardized, services are often customized and tailored to meet the unique requirements of each customer. Both products and services play a crucial role in satisfying consumer demands and contributing to the overall success of a business.


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IntangibilityPhysical and tangibleIntangible and experiential
OwnershipCan be ownedCannot be owned
ProductionManufactured or assembledDelivered or performed
DeliveryPhysical deliveryDirect delivery or performance
CustomizationCan be customizedCan be customized
PerishabilityCan be perishableNot perishable
StorageRequires storageDoes not require storage
UsageCan be used multiple timesUsed once or multiple times
ReturnCan be returnedCannot be returned
PriceFixed priceVariable price
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Further Detail


Products and services are two fundamental components of any business. While products are tangible items that can be bought and sold, services are intangible offerings that provide value through expertise, assistance, or performance. Both products and services play a crucial role in meeting customer needs and driving business success. In this article, we will explore and compare the attributes of products and services, highlighting their similarities and differences.

1. Tangibility

One of the key distinctions between products and services lies in their tangibility. Products are physical entities that can be seen, touched, and possessed. They can be stored, transported, and displayed. On the other hand, services are intangible and cannot be perceived through the senses. They are experienced and consumed in the moment of their delivery. While products have a physical presence, services rely on interactions and experiences.

For example, when purchasing a smartphone, customers can physically hold and examine the device, assess its features, and compare it with other models. In contrast, when hiring a graphic designer, the service is intangible, and the customer relies on the designer's portfolio, reputation, and communication to evaluate their expertise.

2. Production and Delivery

The production and delivery processes for products and services also differ significantly. Products are typically manufactured or assembled in a controlled environment, often involving raw materials, machinery, and labor. They can be mass-produced, allowing for economies of scale and standardized quality. Once produced, products can be stored, packaged, and shipped to customers.

On the other hand, services are created and delivered simultaneously. They are often customized to meet the specific needs of individual customers. Service delivery relies on the expertise, skills, and knowledge of the service provider. For instance, a restaurant prepares and serves meals on-demand, tailoring them to the preferences of each customer. Similarly, a software development company creates and delivers customized software solutions based on the client's requirements.

3. Perishability

Perishability is another important attribute that distinguishes products from services. Products can be stored and inventoried, allowing businesses to manage their supply and demand. They can be kept in warehouses or on shelves until they are purchased. However, products can also become obsolete or deteriorate over time, especially in industries with rapidly changing technologies or short product lifecycles.

Services, on the other hand, are perishable and cannot be stored or inventoried. They are consumed at the time of their delivery and cannot be saved for later use. For example, a missed appointment with a hairdresser cannot be rescheduled for the next day. Similarly, an unused flight ticket loses its value once the departure time has passed. This perishability poses challenges for service providers in managing capacity, demand fluctuations, and optimizing resource utilization.

4. Customization and Variability

Customization and variability are attributes that apply differently to products and services. Products can be standardized, allowing for mass production and economies of scale. They are often designed to meet the needs of a broad customer base. However, products can also be customized to some extent, offering different variations, features, or options to cater to specific customer preferences.

Services, on the other hand, are inherently customizable and can be tailored to meet individual customer requirements. They are often highly variable, as they depend on the specific circumstances, skills, and expertise of the service provider. For instance, a consulting firm may offer a range of services but will adapt its approach and recommendations based on the unique challenges and goals of each client.

5. Ownership and Transferability

Ownership and transferability are key attributes that differ between products and services. When customers purchase a product, they acquire ownership and the right to use, possess, or resell it. They can transfer the ownership of the product to another party through a sale or gift. Products can be physically transferred from one person to another, allowing for secondary markets and resale value.

Services, on the other hand, are not owned or transferable in the same way as products. Customers do not acquire ownership of a service but rather the benefits or outcomes it provides. Services are consumed and experienced, but they cannot be resold or transferred to another person. For example, a customer who hires a plumber to fix a leak does not own the service but benefits from the repaired plumbing system.


Products and services are distinct yet interconnected components of business offerings. While products are tangible, mass-produced, and transferable, services are intangible, customized, and experienced in the moment of delivery. Both products and services have their unique attributes and challenges, and businesses often offer a combination of both to meet customer needs effectively. Understanding the differences and similarities between products and services is essential for businesses to develop appropriate strategies, manage operations, and deliver value to their customers.

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