In the Agrarian Economy, people sell commodities; in the Industrial Economy people sell goods; in the Service Economy people sell services; and now, in the Experience Economy, people sell experiences, according to Joseph Pine and James Gilmore in their book The Experience Economy: Work is Theatre and Every Business a Stage. Competition and market forces pressure you to lower your profits, but you can fight back and increase your profits by turning your goods into a service or your service into an experience.
The Internet is the greatest force for commoditisation ever known, enabling customers to compare your prices with everyone else’s and choose the lowest. If you want to resist commoditisation, you need to create experiences that engage individuals in a personal way. The realms of engagement include entertainment, education, aesthetics and escapism. Goods or services can be made richer by theming an experience around them which engages the five senses.
The book goes on to describe ways in which you can customise goods to make them into a service, and ways in which you can customise services to make them into experiences. It describes how work has become a form of theatre, and discusses different ways of performing.
I found the analogies with acting a bit strained, and the experience of reading the book was not as engaging as I was expecting. Nonetheless, in my view the book has made an important contribution to our understanding of what people pay for and why.