In this article, the authors examine three types of sympathetic pricing – painkiller pricing, compassionate pricing and purposeful pricing – and demonstrate how companies have used these pricing tactics to increase both brand trust and brand loyalty. By applying sympathetic pricing, you can turn a negative experience for a customer into a positive one, thereby giving the customer a positive contact moment with your company, as the authors explain. Arjen Brasz (arjen.brasz@simon-kucher.com) is a Senior Director at Simon-Kucher & Partners in Amsterdam. Frank Kroeze (frank.kroeze@simon-kucher.com) is a Consultant at Simon-Kucher & Partners in Amsterdam.

The Pricing Advisor, July 2019

Imagine: after a long and exhausting working day, you plan to go home by train. When you arrive at the station, you see that the transportation system is enormously disrupted. Just before giving up (“Let’s sleep in the office..!”), you get a pop-up from Uber on your phone saying that, to ease the pain of the disruption, you get a 50% discount on a drive home. After a short, comfortable and affordable drive you arrive home safely. This example may sound farfetched and unrealistic. However, it is exactly what Uber did after transport disruptions hit London and Boston. It is an example of sympathetic pricing: offering discounts at the right moment, when people need them most. By applying sympathetic pricing, you can turn a negative experience for a customer (public transport disruption) into a positive one (affordable ride home), thereby giving the customer a positive contact moment with your company.

How can you apply sympathetic pricing?

Typically, we see three types of sympathetic pricing: painkiller pricing, compassionate pricing and purposeful pricing.

When applying painkiller pricing, companies help people to overcome everyday struggles. The transportation case in the introduction is a typical example of this type of sympathetic pricing. Other examples are discounts on hotel rooms, in normally sunny destinations, on rainy days (Noosa), discounts for air conditioners in hot apartments in Argentina (BGH) and discounts for umbrellas on rainy days.

With compassionate pricing, companies offer support when life treats you badly. By offering discounts or free services, companies can help. Typical examples include discounted groceries for people living below the poverty line (Community Shop), a workplace and access to databases for free for fired journalists (Pressfolios) or discounted trees at the garden center after a heavy storm (Lowe’s).

Finally, purposeful pricing means that companies help groups with similar beliefs, values or lifestyle by offering discounts, freebees or rebates. The campaign of Corendon to support the gay rights movement in Russia during the Olympic Games in Sotsji (2014) is a good example of purposeful pricing. The airline offered passengers supporting gay rights cheaper tickets to Russia. Other example are the French Public Transport Company that offers free or discounted public transport on smog-risky days to combat pollution and restaurants that offer discounts for smiling or saying ‘please’ when placing an order.

Why should you consider applying sympathetic pricing?

Although applying sympathetic pricing will not have an immediate positive impact on your bottom-line, it can have an impact in the longer run. Recent research by PR Agency Cohn & Wolfe shows that only a small minority of consumers trust businesses. Sympathetic pricing can, especially in a business-to-consumer environment, help to improve the image of and trust in businesses. By offering discounts at the right moment, a business can prove it cares about its customers. This will result in an uplift of the business’ image, (re)gained consumer trust and new valuable brand supporters. In the longer run this, and possible positive media coverage, will have a positive impact on your bottom-line as well.

So, how will you use sympathetic pricing? Will you offer free transportation or discounted coffees/snacks during traffic jams? Will you give discounts on healthy products to people on a diet struggling to meet their goals? Or will you give discounts to companies that show they are trying to reduce carbon dioxide emissions?