This research develops and tests the Effective Service Design model which integrates Customer Preferences, Organization Strategy and Resources of the organisation. The research extends the past research in the area of optimal service design by incorporating the strategy and resources along with customer preferences. This research is the first attempt to link strategy and resources with customer preferences. The study uses number of techniques and enables managers to make better decisions regarding resource allocation for effective service design considering organization strategy and customer preferences. Major theoretical contributions of the research are first in the area of services management and second in the area of resource allocation literature. The current research provides an effective service design model to services management area which integrates customer preferences, strategy and resources. This study contributes to resource allocation literature by considering customer preferences and organisation strategy for resource allocation. The managerial implication of this research is that it provides several scenarios for resource allocation in organisation.