Intermediate Products (including both goods and services) are produced in order to be used in the production of some other goods or services and not in order to be consumed directly. These are often referred to as producer goods and semi-finished goods.
Capital goods and raw materials are good examples of intermediate products because they are further used in the production of final products which can directly be up for consumption.
Intermediate products are mostly sold between businesses for further modification where the business selling these products is in the business of producing them and the business buying them is in the business of manufacturing finished goods.
Types of Intermediate Goods
Based on the steps required to get to the finished or final product, intermediate goods can be categorized into a few types -
- Primary,
- Secondary and
- Tertiary
For example, when the farmers grow corns and sell them to the milling companies for a net profit, corns are intermediate goods. After grounding the corns into cornflour, the milling companies sell them to restaurants and dessert bars.
The chefs at restaurants would prepare delicious soups using cornflour as a thickening agent and serve them to the diners. That makes the cornflour a secondary intermediate product and the prepared dishes final or finished products.
Use the Term in Sentences
- It is not usual to find many intermediate products on the shelves of the stores.
- Intermediate products are one of the most important elements in the production process and that’s why they are also called “producer goods”.
- The same product can sometimes be used as an intermediate product as well as a final product under different scenarios.