Second-degree price discrimination happens when a business charges different prices based on the quantity bought or the version of a product chosen, rather than based on the individual customer.

In this system, consumers self-select their own price tier, meaning the company does not need to know personal details about each buyer. Common examples include:

• Quantity discounts: Lower prices for buying in bulk.
• Version-based pricing: Offering different versions, such as standard versus premium software.
• Block pricing: Lower prices for higher usage, commonly seen in electricity or water bills.

This strategy is frequently used in industries like telecommunications, utilities, and retail. Because customers choose their own tiers, some consumer surplus remains with those who select lower-priced options.