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For the most part I agree with you, though, for me, the real deciding factor is my respect for the market and/or desire to be a part of it,
I think we're saying the same thing. Emphasis mine.
For me personally, I start at the toughest market I have a desire to be in and work my way down
Not the toughest market, period. The toughest market I want to be in. And the reasons I want to be in them often vary widely. I'd like to get in Threepenny because it's so well-respected (and it pays well). I'd like to get in Cemetery Dance because that's a goal I set years ago. I wanted my story to be accepted for the monster hunter anthology because it just looked like fun.
Pay also has little to do with it, in many cases. Some of the most well-respect literary journals coming out of universities, for instance, pay copies. All other things being equal, however, I'll submit to the higher paying markets first. If a market that was really easy to get into paid well, heck yeah I'd submit there, though. Oh for there to be such places.
Shelley