What are products based companies and services based companies.

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What are products based companies and services based companies.

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A product based company makes a product. Ie. I make peanut butter. I collect ingredients and process them into a physical product.

A service-based company delivers intangible services. Ie. my company employs a group of psychologists that provide customers with mental health care.

Essentially a product based company has many physical challenges. You’re dealing with physical ingredients or components, the logistics of moving those things around, the tools or machines you need to process them etc.

Service-based companies often largely rely on knowledge, information and skills to provide value to their customers.

A service based company is like a hairdresser or barber – they get paid for a service and not a tangible object. Another example of a service based company would be airlines. A product based company focuses business on selling tangible objects. Many companies are a blend of service and products – for example Apple sells phones (a product) and also services like Itunes.

I sell you a car. I sell a product (the car). I am a product based company.

I transport you somewhere with my car. I sell a service (the transport). I am a service based company.

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If you get something tangible at the end of the transaction, it’s a product based company. If someone did something for you, it’s a service. Many company do both.