Pricing is linked to your strategy. Your strategy can be linked to a products life cycle, a name brand, quality, supply and demand, durability, appearance, diversity, but the most important part of your strategy should always be the cost of your product or service.
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To put it in perspective, the pricing model should always be as follow:
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Pricing = Cost / (1 - desired gross margin)
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As an example: Let's say you sell one product and that product costs you $75 to make. You would like a gross margin of 25% or $25.
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Cost = $75
Desired gross margin = 25%
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Pricing = $75 / (1-.25) = $100
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Therefore, your desired price for that product will be $100.
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Now, let's say the market sells that product at $95. You will have to make a choice, one, position your product as being higher quality than the competition or try to reduce your cost to match the markets pricing to achieve your expected gross margin.
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It could also be that the market sells the product at $125, therefore leaving you to decide to change your price to maximize profit or keep it at $100 to steal the sales from the competition. Here again, you have to think how customer will perceive your product. As an example, when gas price increase at one pump, the competition usually follows as they know customers will not stop buying gas even though the gas price has gone up therefore increasing their profits.
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As you can see, the pricing model is liked to your strategy. What ever you choose, it will impact how you perform, so having a really strong pricing model will guide your company.