Products and services create the backbone for any business. No matter the size of the business, one of the first things a business person will do is decide what the business will offer for people to purchase. These will be either products, services or a combination of both. Even though the idea of products and services could overlap, there are ways to distinguish between the two of them for business purposes.
Products are normally physical objects or things that can be consumed, touched, owned, or held in some manner by the client. Products can range from a piece of clothing to a physical location for holding an event to an insurance policy. With all of these, you make a transaction that allows someone to have the product in exchange for money or other agreement such as a bartering arrangement.
Services are usually intangible and they don’t allow the other person to own something. For instance, in consulting services, the person cannot touch a consulting engagement. Even though information has been exchanged, the client does not end up owning any tangible thing as a result of consulting. The service can provide a benefit to the client because it can change something in them mentally, emotionally, physically that takes them from where they started before delivery of the service to where they want to be. However, unless a product is delivered in the process, the client does not walk away with anything physical.
You can also have a business that combines products and services. Many service professionals find that adding a product to their business helps to increase the interest of buyers in their offerings. People like to have something tangible for their money. However, this is not always the case. For instance, depending on the type of service provided, the service provider might also write a book or workbook, develop a business or marketing plan, or provide medications for a diagnosed problem. Now the business has both services and products to offer.
A business can develop a service line or product line by creating multiple elements of their business. Examples of a service line would include giving more coaching or consulting services with increasingly extensive service packages. For instance, an accounting professional might start by offering one hour of consulting on how to set up your business books. From there, they can increase the services to include 12 months of consulting you on how to keep your books so you know what to do. The client can select from the line of services available.
That same accountant could offer a product line in the business by offering software to help with bookkeeping, creating accounting statements and filing taxes for the customer.
You can see that having a good product or service line offers more opportunities to sell to clients which can increase the profit and success potential for a business.