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Goods & Services: Definition & Examples

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  • 0:04 Goods vs Services
  • 1:07 Tangibility
  • 1:33 Ownership
  • 1:53 Ability to Return
  • 2:17 Measuring the Quality
  • 3:01 Lesson Summary
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Lesson Transcript
Instructor: Allison Tanner
This lesson defines goods and services and describes how a good is different from a service. It also provides examples of how you can tell the difference between a good and a service.

Goods vs. Services

Mary and Annie are in need of functional computers in order to use them for their college classes.

Mary is looking to buy a new computer. She is looking to select the best option among all of the 'goods.' Goods are tangible products that consumers buy to meet their needs. Mary's new computer is a good because it is a product she will purchase and take home.

On the other hand, Annie is looking to have the screen of her current computer repaired. The repair is known as a service because Annie will not be purchasing a product. Instead, Annie is looking to pay for a skill, known as a service, which can help her to meet her needs.

Goods and services are two different but important components of a person's everyday life. In business, we can distinguish a good from a service using a few simple steps.

Knowing a Good from a Service

Identifying a good from a service can be easy if you use a few simple tricks!

Goods and services differ in areas such as:

  • Tangibility
  • Ownership
  • Ability to Return
  • Measurement of Quality

Using Mary and Annie's computer needs, let's evaluate the differences between a good and a service.

Tangibility

A good is known for being tangible. This means that it is something physical you can actually touch and take home. Mary's new computer is a good because she will actually take a physical item home. However, a service is intangible because it isn't something that can be touched or stored. For example, Annie needs a repair service for her computer. Although the repair will restore the use of her computer, Annie isn't purchasing a physical product.

Ownership

When someone buys a good, they obtain ownership over the item. Mary will own her new computer. On the other hand, when someone buys a service, they don't gain ownership of that service. Annie will not buy the repair person, but she is buying their services. In the end, the repair person will maintain ownership of the service.

Ability to Return

Ownership influences return.

Consider that because Annie will not own the service, she cannot 'return' the repair service. She could request more work to be completed, but she is not able to give back the time spent on the repair. On the other hand, Mary has the option of returning her computer if she decides it doesn't fit her needs.

So, you can return a good, but you can't return a service.

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