Difference Between Product and Service Innovation




February 21, 2022

Innovation refers to new techniques, products, domains, and services. There are several types of innovations that exist. Each innovation is different from the other. Similarly, product innovation is different from service innovation. The difference between product and service innovation lies in different factors that separate and categorize them.

Product innovation enhances the physical appearance and functionality of the product. In contrast, service innovation is an intangible process of providing customers with value and improving their performance. Product innovation refers to developing new and unique products to improve the way of living. It redefines the terms of quality and standard of the existing product.

Product innovation involves the customer-centric approach to make the output attractive. However, the service innovation focuses on the customer-centric approach to stay relevant to the customers and become competitive.


Components That Prove The Difference Between Product And Service Innovation


Innovation is a process of continuous improvement in the quality of a product, domain, or service. Several factors help you differentiate between the different types of innovation.

  • The backstory of developing a product and service

Product innovation requires product concept, technology, manufacturing, and supply chain. Product innovation starts with product concepts, followed by technology and manufacturing. For example, Apple is a company that uses the concept of product innovation.

The product requires a  supply chain to meet the needs of the customers. In contrast, service innovation requires a service concept, client interface, and service delivery system (technology).

  • Cost of development

The inevitable difference between product and service innovation lies in their development cost. The development cost for product innovation is high compared to service innovation. Also, the design, development, and manufacturing of a product require a good amount of money and time. The service innovation generates revenue consistently without regular investment. One can test and improve the services after its development, whereas a product once launched must have no discrepancies.

The product innovation has higher scalability compared to service innovation which increases the development cost and makes it impossible to improve and enhance a product after the launch. However, the scalability of service innovation is limited to the program's capacity.

  • Risk

Development risk is higher in product innovation. One cannot make changes at the final stage of product innovation (development and manufacturing). This requires focus and sharpness at every step. The changes in the pre-determined process of developing a product can cost a firm heavily.

However, a service innovation doesn't have a higher development risk. The service innovation holds the scope of improvement and development after the launch.  It is easy to make changes or improvise the offer for their customers. The firm can bring change to the existing services with the help of feedback.



The world holds a strong future for product and service innovation. The scalability still lies with the customers to experience the best product and service innovation. MIT ID Innovation is such a place that offers you the best innovation courses in Pune. The courses help you think about innovation in a way that will lift your tomorrow.

We believe in providing value with money. Our curriculum focuses on the skills that will stay relevant in the future. We educate our students not to just complete the course but to add value to their lives. We help you explore innovation like never before and create something unique and different. Connect with us to learn more!

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