The best and most simple method to set the correct saddle height, is to sit on the saddle with the crank arm in the 6 o'clock position pointing down. Place the heel of your foot across the centre of the pedal axle. In this position the leg should be completely locked out and extended as much as possible.

With this position, once the foot is slid back and the ball of the heel is on the pedal axle, there should be a slight bend in the knee at full extension.

Correct saddle height is very important to prevent injury and knee pain whilst cycling.