A service firm is a firm whose primary activity is the delivery of a service directly to a customer or client. In the final stages, individuals usually deliver the service. Banking is a service that usually involves direct face-to-face delivery, but automatic teller machines (ATMs) are an exception. Service requires both capital and labor. Many services are labor intensive, but others are not: telecommunications services, for example, are very capital intensive. Service firms include restaurants, telecommunications, banking, accounting, health care, and dry cleaning.

The distinction between a manufactured product and a service product is not always obvious. However, the distinction between a manufacturer and a service firm is more apparent. Most manufactured products ultimately provide a service, and some services involve a product.