Mahmood,

Joe almost touched on the subject.

Consider not only your costs/price and your competitor's price at the present time, but look forward to what your competitor might do to his price after you've introduced your product. If his product is the only one on the market or is so dominant based on performance, the market will pay the price he demands. If you introduce a product that competes toe to toe with his, he'll reduce his price, if he has the margin to do so.

So - be brutally honest with yourself about
(1) your own blood, sweat, tears and costs;
(2) estimating your competitors costs (never mind his blood, sweat and tears - he's already shed his for product development and is presently for his product support effort)

Be wise as you evaluate the situation, look for the payback in terms of the "capital" product (one time sale) and the "consummable" (that which makes the one time sale operate, but is a requred purchase over and over again).

And like Erik says, "Have Fun!"

Bruce