Selling Products Vs Services: What is The Difference

Products and services are two completely different types of offerings businesses provide to customers that make their lives easier and more comfortable. While products are tangible goods that customers can touch and control, services are intangible benefits that solve a problem. Products include vehicles, shoes, jewellery, food items, and electronics, and services include business consulting, legal counselling, healthcare, insurance, education, etc. Selling products and services differ in how they are developed, distributed and delivered to customers.

Individuals who plan to establish a start-up or purchase a business for sale in the United Kingdom must understand the dissimilarities between products and services to make the right choice. It can help them understand the market trends, customer behaviour and demand for the commodity or service they choose to sell. Here is a list of differences between selling products and services. It can help entrepreneurs trade and promote their products effectively.

1. Development of Goods and Services

Starting a service-based business is easier than setting up a product-based entity because of the costs involved. Procuring, storing, manufacturing, or assembling goods and commodities requires a lot of manpower, time, and working capital, which increases the cost of goods sold. Conversely, selling a service is way easier because it can be started with a computer and an internet connection. Many individuals run home-based service businesses as a side hustle.

Services can be easily customised to suit customers’ needs and can improve satisfaction levels. However, products are generally mass-produced and cannot be adjusted to suit individual needs. Businesses selling products have to produce goods according to demand and store them effectively to manage optimum stock levels.

2. Pricing of Products and Services

Product pricing depends on the cost of materials, transportation and marketing required to complete the sale. It also depends on the prices of competitive products in the market and the income level of the target audience. The seller can either set the price based on the cost of goods sold or the perceived value of the product in the marketplace. The perceived value can be established through marketing and positioning the item in a luxury, premium or low-budget category.

Services are priced according to market trends because they do not involve much production cost except marketing. The seller must consider the estimated revenue and price the product accordingly. They can also use the subscription pricing model or the tiered pricing model, which offers different price segments for different audiences.

3. Sales Techniques for Goods and Services

Selling tangible goods is easy because the products can be sold through various channels to reach a wider audience. These include direct sales, where the business pitches the product to the clients; inbound sales, where customers come to physical stores to buy the products after viewing an ad; e-commerce-based sales, and distribution of free samples.

Individuals who are building a start-up or purchasing a business for sale in United Kingdom must know that services are sold through business networks, sales tools, referrals, and word of mouth. This type of selling involves more consultative selling because customers have to be informed about the uses of the services that cannot be evaluated physically before purchase.

4. Skills Needed to Sell Goods and Services

Skills needed to sell products include persuading the target audience with the help of effective communication and an enticing visual display of the items. Advertising and marketing support the in-store promotions and do most of the hard work. It lessens the burden on the sales team.

Selling services requires more effort because the sales team must understand the needs of every customer. They have to customise the sales pitch and the service according to the needs of the clients and influence them to purchase. They have to inform them about the value proposition and adapt the service to their needs.

5. Impact of Tech on Goods and Services

Product-based businesses follow set production, stocking, distribution, and sales strategies. These standardised processes and workflows help maintain organised operations. Business owners have to be on the lookout for new trends and technological innovations that can impact sales. If competitors adopt the new tech, the business can get left behind and lost in the clutter. However, evolving and adopting new processes can be disruptive and time-consuming. It requires upskilling the staff and changing the existing systems.

Entrepreneurs who purchase service-based businesses for sale in the United Kingdom have it easy because of their flexibility. These models easily accommodate changes in technology to improve their services and satisfy customers. They can quickly train their sales and support staff and get started with advanced services in no time.

6. Customer Relations for Goods and Services

Product-based businesses focus more on selling than maintaining relationships with buyers. They provide customer services to get repeat sales but are not completely dependent on them. They acquire new customers and generate leads through their marketing strategies. They use feedback occasionally but are more concerned about expanding and developing the business.

Service-based businesses are a bit different and follow a customer-centric approach. They are completely dependent on their relationships with clients for sales and word-of-mouth publicity. Thus, they go above and beyond to make their customers feel valued and provide them with an excellent buying experience. They provide robust ongoing support and help them at every step of the way, even after the purchase.

7. Marketing of Products and Services

Products can be promoted through visual representation on media channels and attractive displays in stores. If the buyer is unhappy with the quality, they can return it to the seller and check it physically before purchase. Buyers take less time to decide and compare physical products, making marketing products easy.

Conversely, individuals planning to invest in United Kingdom businesses for sale that offer services to customers must depend on customer service. They have to build relationships and personalise the selling strategy for each client. They cannot use lavish images or visuals and have to promote the value provided by the service.

Wrapping Up

Products and services are completely different and must be sold according to their nature and customer perception. Business owners must develop their sales and marketing strategies based on their offerings, market trends, and the needs of the target audience.