Two sides with good intentions for mutual benefit, unintentionally end up in conflict. Contracts fail when the level of conflict crosses a threshold. Each side tends to watch out for its own costs and acts in their own self-interest and the whole thing gets gamed, left to the vagaries of competition and regulation in markets. The ideal service contracts work as follows. Empathy has a compounding effect both sides in terms of the quality of experience and transaction costs. A reduction in costs on one side will reduce cost pressure on the other side. The enjoyment of benefits on one side, will lead to enjoyment on the other. Over time, goodwill and trust accumulate on each side for the other. This leads to a reduction transaction costs, which are a necessary evil. Pain occurs through every stage of a service, from advertisement to enjoyment, through enrollment, engagement, and fulfillment. These are transaction costs which are over and above the fulfillment or production costs which are costs of goods sold or COGS in accounting terms.

Posted by:Majid Iqbal

TL;DR I bring clarity to the concept of a service.