Pricing of anything always gives people heartburn (especially me). Even though this post is about pricing software, it has a lot of really good insights into pricing just about anything. For me, the best line is:
6. No battle plan survives contact with the enemy. This quote is not actually in the book, but I think it still fits the theme. When setting pricing, it’s important to consider what the “market response” is going to be — particularly if you’re in a well-defined category. Just because it doesn’t make economic sense for a competitor to get in to a price war with you, it doesn’t mean they won’t do it. Particularly if they’re big or well-funded. If you’re thinking about competing on price, keep that in mind. Better yet, don’t do it at all.
That piece of advice is also good for features and functions of your product. Competition will always move you in strange directions so it’s better to not be too reactionary but look at the tends.