The document proposes a new pricing strategy for Autotrader to increase revenues by segmenting dealers into three tiers based on their needs - high value, medium value, and low value. It recommends implementing a 3-tier menu pricing model where each tier focuses on leads, clicks, or views. Adopting this new segmentation and pricing approach is projected to increase Autotrader's revenues by over $380 million or 29%. Key elements of the strategy include tailoring value propositions, engaging sales teams to help dealers select relevant packages, and continuing to improve the platform's value for dealers over the long term.

1. Pricing Strategy
Recommendations
B2B Pricing
Rahul Gupta
Peter Morelli
Jorge Rosales
Muchen Zhang

2. Situation and Complication
1
Cox owns many products
(KBB and AT, others)
2
Market leading platform
connecting car buyers and
dealers
provide maximum vehicle inventory
offering a “tiered pricing” model.
3
Declining growth rate for
Autotrader.com
Good: dealers understanding digital
channels and their power
Challenge: dealers demanded more
“proof” of ROI on advertising spend
4
Representative complaints
from sales reps about
dealer dissatisfaction with
AT.com pricing and value
2

3. Autotrader can take steps to increase revenues
Pricing Tiers
Capture WTP from
each dealer segment
Business Model
Deliver value to each
segment based on
their needs (reach vs.
engagement vs. leads)
Segmentation
Implement 3-tier menu
pricing to induce self-
selection by each
segment
Value Prop
“Reach and Influence
the most shoppers
throughout the journey
to purchase”
Implementing the recommendations is expected to
increase revenue by more than $380M (29% increase)
3

4. Autotrader can impact the entire customer sales
funnel with its scale and platform capabilities
Present
Future
# of dealers
Engagement
Reach
Transparency to
dealers
Perceived Value

5. Monthly Subscription Plan
(Used Cars)
Premium
15
Spotlights Days
14
20 14
7 7
- -
Max
Plus
Featured
Core
Featured
Platinum
Spotlights
Spotlights Days
Platinum
Spotlights
12
6
-
-
- 14
5 14
4 7
2 7
4
-
-
-
7
days
Current 2-tier pricing structure is confusing
5

6. Disparities in pricing drive dissatisfaction and
missed opportunities to capture value
$0.66
$1.90
$2.92
Brand Focused
(High Value)
Digital Savvy
(Medium Value)
ROI Focused
(Low Value)
Price per Dealer per Day per Car ($)
Small dealers pay 440%
more per car than Brand
focused dealers; driving
dissatisfaction with pricing
and value
Current value proposition
and pricing strategy do not
align with dealers’ needs,
resulting in missed revenue
opportunities
Brand
Focused,
312
Digital
Savvy,
826
ROI
Focused
, 173
Current Revenue ($M)
6

7. Competitors do not price based on what’s most
relevant to dealers (views, clicks and leads)
Autotrader Cars.com CarGurus Edmunds TrueCar Craigslist
● Scale
● Reach
● Quality
engagement
● Quality
engagement
● Quality/fast
leads
● Proven sales ● Low cost
● No analytics
Pricing Structure
• Two-tiered
pricing
• Based on ad
views
• Single price
• Based on ad
views
• $10-$15
monthly
subscription
fee
• Based on
leads
N/A • $299/transa
ction
• Based on
transaction
N/A
7

8. Autotrader should improve target market
segmentation for better differentiation
Each segment has different needs
High Value Medium Value Low Value
Leads
Clicks
Views
Current pricing model only
captures this amount
8
Leads
Clicks
Views
High
Segment
Mid
Segment
Low
Segment

9. Salesforce should be trained to help the
dealers select relevant packages
9
High Value Mid Value Low Value
Leads SRP Brand Awareness
Lot Visits VDP Shopper Sessions
Website Visits Contacts Banner Impressions
Plan Price Features
Base Plan $1/Car/Day Reach
CTR Pack $3.50/Click-to-Website Engagement
Leads Pack $12.50/Lead Leads

10. The new pricing strategy is win-win for both
Autotrader and dealers
Segments Old Pay WTP Measure Unit
High Value $0.66 $12.5 per lead
Medium
Value
$1.90 $3.50 per CTR
Low Value $2.92 $1 per view
Leads Revenue
• $171M
Clicks Revenue
• $552.8M
Views Revenue
• $970.2M
New Revenue $1,694,014,500Old Revenue $1,310,925,000
29% 10

11. Autotrader should continue to focus on
improving value for the dealers
11
Improve platform attraction to dealers Transparency through KBB
Cross-sell add-on services
Incentivize dealers to increase
their digital spend
Long Term
Strategy

12. QUESTIONS?
12

13. APPENDIX
13

14. Benefit Analysis
Companies Consumer Perceived
Benefits
Dealers Perceived Benefits Pricing Structure Advertising
Strategy
Notes
Autotrader max. inventory
● Value to dealers
● expensive
tiered pricing Traditional N/A
Cars.com “clear, simple and direct”
● providing exposure
opportunity at all times
● lower cost than
Autotrader
single price Traditional most direct
competitor
but offer fewer
advertising
options for dealers
compared to
Autotrader
CarGurus making the online car
shopping experience more
transparent
● Provide dealer with
“leads”
● Pay only the leads
monthly subscription fee
= $10-$15 per lead * #of
leads
SEM/SEO
Edmunds “get instant savings” “lead” information to the
dealer
TrueCar “Never Overpay” “Lower Selling Expenses” $299/transaction Traditional
14

15. 15
% of
Dealers
Annual
Ad Spend
Digital
Slice
Dealer Brand Focused 30% $630K 30%
Digital Savvy 55% $390K 70%
Small ROI Focused 15% $280K 75%
Willingness
To Pay
High Value $5-20
Medium Value $2-5
Low Value $1
Dealers: 12K (Franchised) + 10K (Independent) = 22K (Total)
% of
Dealers
No. of
Dealers
Annual
Ad Spend
Digital
Slice
Overall
Digital
Spending
Autotrader
Share per
Dealer (25%)
Total
Revenue
Brand Focused 30% 6,600 $630K 30% $189K $47.25K $311.85M
Digital Savvy 55% 12,100 $390K 70% $273K $68.25K $825.82M
Small ROI Focused 15% 3,300 $280K 75% $210K $52.50K $173.25M
12,000 $1,310.92M

16. 16
No. of
Dealers
Total
Revenue
No. of Cars
(Monthly
Inventory)
Revenue
per Dealer
per Month
per Car
Price
per Dealer
per Day
per Car
Brand Focused 6,600 $311.85M 200 $19.69 $0.66
Digital Savvy 12,100 $825.82M 100 $56.88 $1.90
Small ROI Focused 3,300 $173.25M 50 $87.50 $2.92
12,000 $1,310.92M
No. of Ads: 30

17. 17
Segment # Dealers Cars Base Revenue Click Revenue
Lead
Revenue
Sale
Revenue Monthly Visitors 19,000,000
Low 3,300 50 $59,400,000 $0 $0 $0 CTR 3.26%
Medium 12,100 100 $435,600,000 $357,703,500 $0 $0
Dealers per Visitor
per Car 2.5
High 6,600 200 $475,200,000 $195,111,000 $171,000,000 $136,800,000
Cars per Visitor per
Dealer 10
$970,200,000 $552,814,500 $171,000,000 $136,800,000 Total Dealer Visits 475,000,000
Base Fee $1
# Ads per Car per
Month 30
Lead Fee $12.50
Total Dealers 22,000
Visitors per Dealer 863.64
# Leads per Dealer 172.73
Click Fee $3.50
Total Clicks to all
Dealers 15,485,000
Clicks per Dealer 704
Sale Fee $200
Total Sales 190,000
Sales per Dealer 8.64
Total Revenue 1,694,014,500