Dynamic pricing strategy gives the profit benefit over the best fixed-price strategy are as follows:
a) Available capacity decreases.
They assume everything is equal, the lesser the production capacity and it is relative to average demand, and get the more profit from the dynamic pricing.
b) Demand uncertainty increases.
The advantage of dynamic pricing increases when the degree of demand uncertainty is more. It is measure by the coefficient of variation.
c) Seasonality in demand pattern increases.
When the demand of season level increases the profit of dynamic pricing also increases.