It’s Business 101: determining how to price your products. The formula is usually pretty basic. Decide on a revenue target; take into account your costs for producing, marketing, and selling your product; and end with the price per product you want to charge. However, a new breed of customer, driven by mobile and on-demand technology, is challenging traditional pricing methods and requiring business owners to be more flexible, responsive and personalized with their pricing. Trendwatching.com, a consumer market analyst firm that publishes monthly trend briefings, identified the movement as sympathetic pricing. This new trend calls on businesses to use creative, innovative methods to show customers they care through their price points.

The Millennial generation, born between 1980 and 2000, are the driving force behind sympathetic pricing’s flexible and imaginative discounts. According to the Case Foundation 2014 Millennial Impact Report, Millennials number approximately 80 million and spend about $300 billion on consumer discretionary goods in the U.S. each year. The Case Foundation also found that Millennials’ perception of a company’s positive impact on the surrounding community is a dominant factor in whether or not they will patronize a business. What’s more, it is not enough for a business to simply state that they support a cause or charity, the next generation of customer expects businesses to put their money where their mouth is: personalized discounts that lend a hand in difficult times or support a shared cause.

That’s how Uber, the on-demand taxi app, responded during a 24-hour Boston bus strike in October 2013. Using a strategy known as “pain-killer pricing,” Uber offered free rides to impacted students for the duration of the strike. According to Trendwatching.com, Uber was one of several successful examples of the idea. Others included Noosa International Resort in Australia, where the resort helps to brighten dampened vacation plans by offering guests a Rainy Weather Rebate on their hotel bill if rainfall is recorded at over .5 cm during their stay. The Wolf & I restaurant in Melbourne, Australia, takes sympathetic pricing to a more personal level: A free drink is given to anyone who received a parking ticket that day.

At first glance, sympathetic pricing may seem like an ill-conceived marketing attempt, sure to hurt a business’ bottom line. Not so, says Robbie Abed, director of product strategy for Y Media Labs. “It’s been proven that people or business who give first suffer in the short term but have more success in the long term,” he said.

“There is a great book by Adam Grant called Give and Take: A Revolutionary Approach to Success where he says, ‘Being a giver is not good for a 100-yard dash, but it’s valuable in a marathon.’ So the way for the business to think about sympathetic pricing is not the short-term loss but the long-term gain of a loyal customer. If a small business offers truly genuine sympathetic pricing offers, they will benefit long term through the relationships they gain.”

Data-driven pricing

The opportunity to show customers you care on a personal level has never been greater, thanks to the growth of self-tracking tools. Data-driven sympathy invites personalized discounts in response to the unique metrics consumers collect on their mobile smart phones throughout the day. “If you’re a small business that has any association with being healthy, you can use the metrics tracked by Apple Watch, Fitbit, etc. to see if [the customer] exercised at least 30 minutes a day for the past week. If they have, then you can offer a discount for being healthy. This can include any metrics such as heart rate, glucose levels, steps taken, or calories eaten,” Abed said. Discounts can even be offered to customers who are in a bad mood, tracked with the ‘Mood Panda’ app.

Data-driven sympathetic pricing used creatively can generate customer loyalty in new and exciting ways. Abed said a business might consider offering discounts to customers paying for parking meters, tracked by apps such as PayByPhone. “A business can implement a program to give discounts for anyone who spends more than a certain amount of money on parking a month, especially if it’s to eat or drink at their business.” A restaurant could experiment with offering a flexible price for their soup of the day based off of a local weather app; the colder the weather, the cheaper the soup.

Sympathetic pricing is a new frontier for some, and it is important to consider the legal implications when introducing a new pricing structure. Sean Kirk, attorney at Bone McAllester Norton PLLC, said that sympathetic pricing conceptually works, with the right planning. “A company needs to make sure that they have the infrastructure in place to allow it to work,” he said. Kirk also said that businesses need to be careful “not to make any misrepresentations regarding what you are going to provide.” To avoid being accused of discriminatory pricing, be sure that the discount you are offering doesn’t discriminate against individuals on the basis of race, color, religion or disability.

Community support

Using creative pricing strategies to target specific needs or causes in the community can benefit a business on multiple levels. A 2010 study done by Cone Communications purports that 85 percent of consumers have a better outlook on businesses that give back to a charity the customer cares about. Taking photos of your charitable endeavors and discussing the details of your sympathetic pricing generates positive press and provides easy content for your website or social networking page. Teaming up with an established charitable organization can only increase a business’ exposure when the charity posts the business logo on its website and event flyers.

Car wash operators across the globe build customer good will through yearly participation in Grace for Vets. Grace for Vets was started by Mike Mountz, former owner of the four Cloister Car Washes in Pennsylvania, in 2004. After Mountz retired from his position, Mark Curtis, CEO of Splash Car Wash in Greenwich, Connecticut, stepped in to serve as president of the Grace for Vets board. The program organizes car wash operators in every state of the union and in four countries to give away car washes on Veterans Day each year. Grace for Vets has grown every year. Last year 268,677 free washes were given away from 3,300 different car wash operators.

Supporting Grace for Vets is “a great promotional device, develops good will in the community and gains publicity” for your business, Curtis said. “The car wash industry as a whole is amazingly philanthropic.” Many operators and owners in the car wash industry give charitably to support local causes of import in their communities.

SafeRides of Westport, Connecticut, is another organization benefiting from the support of the car wash industry. The company provides a free, confidential, safe ride home to youth who find themselves in unsafe situations. Every Saturday night, a team of volunteer high school students standby to offer their classmates a ride home. Westport Wash and Wax shows support for SafeRides by offering half-off cleaning services for volunteers whose vehicles were dirtied while on duty. Mark Dulsky, director of SafeRides of Westport, appreciates the support and feels it is mutually beneficial. “It definitely helps [Westport Wash and Wax]. We put them on our website, and every time we do training we mention our sponsors…These kind of partnerships help generate goodwill for our club.”

Besides strengthening ties to the community and increasing sales by encouraging customer loyalty, supporting philanthropic causes through sympathetic pricing can help create a more committed workforce. Generational research suggests that Millennials not only prefer to patronize companies that support the community, but are more likely to be recruited and retained by companies that are seen as making a tangible difference in the world. This generation of buyers not only cares about the quality of the goods or services received, but the character of the company delivering them.