It's a very unscientific way of looking at it, but I never really like spending more than what it's likely resale/scrap value would be afterwards... IE what it would take to replace the vehicle outright with another in similar condition but without whatever fault I'm looking to fix, and what I may get back.
Though these days I'm sort of transitioning to "how many more miles is this repair likely to get me?"... so, e.g. the new water pump and coolant rail, at about £200 inc VAT, was justified on the basis that after another 2,000 miles it'd have dropped below 10p per mile and therefore be cheaper than the fuel used to travel that distance, and I was more than likely to get that far in the same car. (I've JUST managed it, now, on the verge of scrapping thanks to accident damage) ... Generally given the age/state of the vehicles I drive, anything over about £350 is viewed as rather steep, especially if they come more than twice a year (and I know that's just the basic servicing budget for some people...)
I operate therefore on a more generous version of the insurer's repair/write off decision model.
Though I'll admit chucking quite a lot of money into the pit that was my beloved 1.0 mk3 Polo CL. First car, y'see... I had to keep it alive at all costs. And I did actually sell it, too... parting was such sweet sorrow. But I needed that 400 quid and whatever broke next was probably going to cost at least that much