Product Vs. Service: 10 Difference Between Products and Services

Product Vs. Service

Modern marketing says that a product and service are the same – saying that a service comes within or as a product. However, there are various differences between them that can be pointed out.

A product refers to a tangible item that can be touched and felt such as a mobile, laptop, bike, etc. On the other hand, a service refers to intangible benefits or experience, however, it possesses the ability to satisfy consumer needs.

Let’s define both service and product clearly and differentiate them:

What is a Product?

A product is something that we touch and consume to fulfill our needs which is produced through some processes. Examples of products include food, vegetables, biscuits, bikes, and many more.

What is a Service?

A service has intangible benefits that are offered for sale which has the ability to satisfy consumer needs. For example haircuts, banking services, fitness training, and more.

Difference Between Product and Service

Now, let’s differentiate between products and services with their bases of difference.


Products are tangible entities that can be physically perceived through sight, touch, and other senses. For instance, a smartphone, a book, or a piece of furniture are all products.

In contrast, services lack physical substance. They cannot be held, seen, or touched. Think of services like consulting, education, or healthcare; they exist as experiences rather than tangible objects. This fundamental distinction plays a pivotal role in how they are marketed and delivered.


The concept of perishability is crucial in understanding services. Services are often perishable, which means they have a limited lifespan. Once a service is delivered, it cannot be saved or stockpiled for future use. A classic example is a hotel room; once a night’s stay has passed, it cannot be stored or resold.

In contrast, products, whether they are cars, electronics, or clothing, can be manufactured, stored in inventory, and used or sold at a later time. This difference influences how businesses manage capacity, demand, and pricing for services.

Read More: Product Mix Vs. Product Line: 10 Key Differences


Services exhibit a level of heterogeneity or variability that is less common in products. This variability arises from the interaction between the service provider and the customer. Factors such as the skills, attitudes, and behaviors of service personnel, as well as the unique needs and expectations of customers, contribute to this variability.

For instance, the dining experience at a restaurant can differ from one visit to another, largely due to variations in service quality and customer interactions. Products, on the other hand, are typically produced with the goal of achieving uniform quality and consistency across all units.


Inseparability is a distinctive characteristic of services, reflecting the idea that services are created and consumed simultaneously. This means that the service provider and the customer are often active participants in the service delivery process. Consider a medical examination: the doctor performs the examination, and the patient receives the service in real time. The presence and actions of the service provider are integral to the service experience.

In contrast, products can be manufactured independently of the customer and stored for later use or purchase, and the customer’s involvement in the production process is minimal.

Read More: Product Mix – Definition


When customers purchase products, they acquire ownership and physical possession of the item. They can use, store, or dispose of the product as they see fit. For example, when someone buys a car, they own that car and can drive it, sell it, or modify it.

In the case of services, ownership is not transferred. Instead, customers experience the service but do not own it in a tangible sense. For instance, attending a live concert provides an experience, but the customer doesn’t gain ownership of the music or the performance itself. The intangible nature of services means that customers cannot possess them as they would with a product.


Services exhibit variability, meaning that each customer interaction can differ, even when provided by the same service provider. This variability arises from multiple factors, including the specific customer’s needs, the skill level of the service provider, and environmental conditions. For example, the experience of dining at a restaurant can vary depending on the chef, the server, and even the mood of the diners.

In contrast, products, especially when mass-produced, maintain consistent quality. A packaged food item of the same brand and type should offer a uniform taste and quality across multiple units.

Read More: Product Line – Definition

Customer Involvement

Services often demand active participation from customers in the service delivery process. This involvement can take various forms, such as providing information, making decisions, or physically participating in the service, as seen in self-service gas stations or interactive educational programs. Customers play a role in shaping their service experiences.

Products, conversely, generally do not require customer involvement in their production. Manufacturing and packaging processes are typically handled by the product provider, and customers usually play a passive role in the creation of the product.


Services have the advantage of being highly customizable to meet individual customer needs and preferences. This means that service providers can tailor their offerings to create personalized experiences. For instance, a travel agency can design unique itineraries for different customers based on their preferences.

Products, while they can be customized to some extent (e.g., choosing the color of a car), are typically less flexible in this regard. Mass-produced products aim to meet the general needs of a broad consumer base, limiting the degree of personalization.

Read More: Private Labelling – Definition

Evaluation of Quality

Evaluating the quality of services often relies on customer experiences and perceptions, which are inherently subjective. Quality can vary from one customer to another based on their expectations, preferences, and the specific circumstances of their interaction with the service. For example, the perceived quality of a spa visit may differ widely from one customer to another.

In contrast, product quality can be objectively measured using specific standards and specifications. Products are often evaluated based on criteria such as durability, functionality, safety, and adherence to manufacturing standards, offering a more objective assessment.

Price Determination

Pricing services can be a complex process. The cost of services is not solely determined by production expenses but also by factors like the customer’s perception of value and the competitive landscape. Since services are intangible and their value can vary from person to person, pricing may involve a degree of subjectivity.

For instance, consulting services can charge fees based on the perceived value of their advice. Product pricing, on the other hand, is often more straightforward. It is typically based on production costs and market competition. Products have a more tangible nature, allowing for a clearer cost structure and competitive positioning.

Read More: What is White Labelling? Definition, Examples, and Pros/Cons

Service Delivery Channels

Services can be delivered through various channels, offering flexibility in how customers access them. This includes in-person interactions, online platforms, phone services, and more. For example, a bank can offer services through traditional in-branch interactions, online banking platforms, or mobile apps.

Products, by contrast, are primarily distributed through physical stores or e-commerce websites. However, the rise of e-commerce has also expanded product distribution, allowing customers to purchase goods online.

Return and Refund

A critical difference lies in the ability to return or refund items. Products, if found defective or not meeting customer expectations, can often be returned, exchanged, or refunded according to established return policies. This provides a degree of consumer protection for physical goods.

In contrast, services, once rendered, are generally not returnable. Customer satisfaction with services is often subjective and may vary from one customer to another. Consequently, service providers may focus on addressing customer concerns or providing complementary services to enhance satisfaction rather than offering traditional return policies.

Read Next: What is Product Labelling? Definition, Types, Functions

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