What are Business products
Business products are either good or services or a combination of both. The product sold by a books store is books (goods) just as the product sold by accounting firms is advice (service).
Products can be sold to consumers (B2C) or to other businesses (B2B). There are different types of products, which are explained below:
- major equipment: items of equipment that are typically large, typically expensive and which tie up a lot of the business’s capital. These might include large items of machinery or computer infrastructure, vehicles, and so on.
- component parts: items that are used, together with others, to make larger goods for sale (for example, the drums and toners used in the manufacture of printers or the elements used in the manufacture or irons).
- accessories: items of equipment that are not as large or costly as major equipment, and more likely to be portable. Such products might include hardware items (for example, a chain saw) or office equipment (for example, a paper shredder) or items for the home (for example, a microwave or a blender).
- raw materials: goods that occur in nature. Typical examples might include items such as sand and gravel (sold to landscapers), fresh foodstuffs (sold to restaurants, takeaway food outlets and local fruit and vegetable shops), and timber (sold to furniture makers and builders).
- Finished goods: like toothpaste, orange juice or toasters.
Price is an important consideration for all products. Another important consideration is a product’s price. To a large extent, this will be determined by its cost to the business to buy (for on-selling) or to produce. Hence, the cost of resources used to create products should be carefully recorded as should the time and effort involved in creating them. This ensures that a business is selling its goods for more than it cost to buy/produce them — essential if a business is to make a profit.
If a business manufactures its products, it is important that it has an efficient production plan. During all phases of production, it should be striving to produce products within cost, time and quality parameters that will bring a return on investment.
For more information about business products, view: