The research paper consists of introduction, summary of the content in three main sections, conclusions and proposals, bibliography and appendixes. The first section “Analysis of the concepts of service, quality and quality costs” reviews theoretical aspects of service including existing classifications of services. The author also analyses the service “quality loop” and the service quality model. Quality costs classifications, setting the service costs, their accounting, analysis and estimation are also reviewed within the services context. The second section “Services in Latvian national economy” provides analysis of the dynamics of most characteristic indicators of the service company activities with the focus on small and medium-sized service companies. The author has defined the growth dynamics of the number of certified service enterprises, its effect on the quality of services. The third section “Service quality and evaluation of economic efficiency” describes the developed methodology for evaluating the quality of service and quality costs including methods for diminishing the hidden quality costs, quick service quality assessment and price setting for the purpose of efficient managerial decision making. Method approbation is done by evaluating the quality of the services provided by an information logistics company, related quality costs and economic benefit gained from improvement of the service quality, including assessment of the economic benefit brought by an innovative service. The content of the paper is covered on 143 pages with appendixes on 14 pages. The paper includes 56 figures, 17 tables and 6 Appendixes that illustrate and explain the paper content. For development of the research paper 133 information sources in Latvian, Russian and English languages were used.