There's a third escape method for the killer:
You can use weapons on him to stun him, causing him to give up when you move onto the next screen. The weapons I've found that work for this so far are the Knife and the Crowbar.

However, there's some circumstances where he'll block your attack and instantly bad dream you with a counterattack. My theories for this so far are that it's based on using the same weapon two times in a row, using the same weapon too many times, or attacking once he appears. I usually ran a few spaces, then found a weapon in my inventory while I was shaking, and used it when he caught up on me.

Killer behavior 2:
If you struggle with the breath-control QTE then there is one other escape method: if you run several rooms away in a row (about 4?), doing it quickly enough that the killer doesn't reappear on your screen between each one, then they lose track of you and the escape sequence ends.
(Reminder: you still need to be careful doing this, because if you leave the killer's room and immediately return to the same room, you get caught. Watch your map! The white triangle is your current POV, and the dotted line is the door you just entered from. Don't always assume "go down" means go back where you came from, it's often not the case.)
I think the escape loop that's accessible the earliest and from the most places is:
Foyer <> Children's Bedroom <> Upstairs Hallway <> Hallway <> Living Room <> Foyer (can be run in either direction)

thanks

@flygonite Spoiler on killer behavior:
They will also react to in-game commands that make a lot of noise, like turning on a radio.

@flygonite The game does count in real time, but you can pause safely. If you sit idle too long the killer will show up. When you are running away it is timed and your cursor moves slowly and shakes as if you're trembling. If you go too slow, they get you, or if you backtrack towards them, they'll get you.

You can make multiple mistakes while trying to click on the rooms to run away and still get to a hiding place.

Once you reach a room with a hiding spot, you will automatically hide and you have to play a little mini game. You'll have to time a button press while the cursor moves over a "safe" zone a bunch of times. It speeds up and shrinks the safe zone each attempt before the killer gives up and leaves.

You should expect that they'll get you a few times while you're playing. The good news is there isn't much functional consequence unless you are going for the "best" ending cutscene which requires that you never get caught.

Good luck!

Hi I'm a big dumb scaredy cat who's not looking forward to this one :V Could you tell me more about how the killer works? Does the game count in real time to decide when to throw it at you if you've been too quiet, or is it counting number of actions? And likewise are you timed when trying to navigate the cursor to run away?

Disregard my previous post, the missing Cigar is a bug, saw a Let's Play with, ironically, Paul Hubans (one of the Night Manor devs) reacting to it for the first time.

If you collect the Tea Oil , then quit to menu the Cigar will despawn & a second Tea Oil will spawn.

You can use the second Tea Oil in place of the Cigar & the game treats it like you did it right, so your save isn't bricked.

the cigar didnt appear for me either, but for some reason i was able to find & use the tea tree twice and that worked

@Matt:
Did you have an inventory item earlier on go away?

If the game takes an item away it leaves a hole that a new item will fill, so your inventory isn't always in chronological order.

So if you had A, B, C
then lost B & pick up D,
It'll end up A, D, C

Thanks for the guide, wasn't able to find the password for the PC since it says there is nothing useful in the playhouse I assumed there was nothing with it.