Pricing

This is a good subject for me. My father and I used to have our own auto glass replacement business.
We based our pricing on costs of goods and perishables needed to provide the service such as the glass and materials and tools needed, along with the gas for our trucks as we were a completely mobile business. We did great for about 9 years without being properly funded or having a business model or plan. We targeted the market we already serviced for a company we worked for years before. The problem came when the economy collapsed and customers did not want to pay for something they didn't really "need". Our biggest selling point was our incredible service, but sometimes there were issues with our prices. We based our prices on what we could do the job for and just barely make a profit to survive. I am curious how a new company with a new product or service decides on what is a "good" or "fair" price.