Basically the 1-5 means how much importance you want to place on each criteria. 5 being the highest, 3 being average, 1 being the lowest, and 0 meaning that you want to completely ignore that criteria.

You can use the ratings as they are if you wish. They have them all set on 3 which means that all criteria are basically given equal importance. That's except for the WT category which is set on zero. WT means "wet track". The ratings are set for a good track, so if it's a wet track, you have to adjust that WT rating accordingly. Basically, you can adjust all the settings depending on how important you think each criteria is. They have an explanation on the site about each of the categories:

CP - Career performance assessment based on weight/class
CF - Current form measured by class/weight
TIM - Revolutionary time assessment
JA - Jockey ability
TA - Trainer ability
JT - Jockey/trainer combination
BP - Barrier position (course & distance)
WT - Wet track performance
Crs - Course suitability
D - Distance suitability
$ - Prizemoney earned
DLR - days since last run

So if for example you think that Jockey ability and prizemoney earned are very important, you could set those two categories at a higher level to all the others. If there's some that you don't even want to consider, you can set them at zero. The idea is to play around with it for a while and see what works best for you.

There is a new section called HCP. This allows you to add your own bonus points or penalties to the score and the price will be adjusted accordingly.

As for the pricing method, you can change that from 1-5 as well. The higher the level, the more it is skewed in favour of the higher rated runners. Therefore, the top rated runners will be rated at a shorter price. A rating of 1 will give a more open set of prices.