What is second-degree price discrimination?

Second-degree price discrimination happens when a company charges different prices based on the quantity or version of a product that a customer chooses. For example, think of a movie theater offering discounts for matinee showings, where tickets are cheaper during the day compared to evening showings. This pricing strategy allows the theater to attract more customers at different times and maximize its revenue. Another example is when a software company offers several versions of its product, like a basic version at a lower price and a premium version with more features at a higher price. By doing this, the company can cater to different customer needs and willingness to pay, ensuring that everyone finds something that suits them.