Start with the best and work down.
That was my rule when I first began submitting short stories. I sent them to the biggest-name magazines first and then, as they acquired rejections, to progressively more obscure and lower-paying markets. My reasoning was that this strategy would land the story in the best place it deserved.
I sometimes made exceptions to this rule. When my critique group judged a story too flawed to fix and I agreed but still liked it, I submitted it to a minor-league magazine . . . and they bought it. When I discovered that my success rate was higher at anthologies—because I could send them exactly what they were looking for—I began seeking out anthology markets.
Despite these exceptions, I still think my rule is a good one.
But it's not very precise. "Best" has been a fuzzy judgment based on name recognition and prestige, quality of production, size of distribution, and pay rate. Recently I saw a friend's spreadsheet that ranked 266 sf/f markets based on 21 variables, including awards, SFWA pro market status, and number of stories in various "Year's Best" anthologies, weighted by a process I didn't grasp.
Wow! It's not often I meet someone more obsessive than I am.
Now that fiction is my main job and not a sideline, I need a more rigorous set of standards for choosing the "best" places to submit. I'll use my friend's spreadsheet, of course, as one source of information. But he and I have somewhat different priorities. One example: I want to make a living at fiction now, so pay rate is more important than the awards a magazine has won.
I hope you will help me decide what my personal ranking for sf/f should include. What do you consider when choosing a market to send a story to, and why? What do you think I should take into account?
In appreciation for your ideas, I'll draw one name from those who comment by midnight Pacific time, 28 July. The winner will receive a softcover copy of my historical novel Like Mayflies in a Stream or, if they prefer, any book at Amazon.com of equal or lesser value.
Coming 28 July: Contest and author interview with Kathryne Kennedy, author of several fantasy romances. People who post comments will be entered in a drawing to win her new novel, The Fire Lord's Lover.