This is a super question. SEO is a very dynamic business.
Let me get it out in the clear that I currently offer a guarantee for placements of specific phrases and the client pays for the positions they achieve on the engines.
But, there are so many valid types of payment options and services offered...
Guarantee for positions achieved
Cloaking (using all of the above strategies)
...to name a few.
Then the kind of phrases companies go after is an issue too. Are the SEO's going after really appropriate and competitive words?
Are the Pay-per-click's going after phrases that bring in hits but aren't qualified?
Are you really getting your money's worth with a Setup/Maintenance type of package? There's no guarantee.
Do the Guarantee for positions achieved companies really getting competitive positions?
It seems to me that none of them are ideal.
The goal always needs to be to give the client positions that put them high on the engines and brings them hits.
But that can be easier said than done.
I am guilty of ranking a client high in positions that 'should' have done them well and yet have brought them little traffic. It was simply an error in judgment.
And judgment is a lot of what this industry is about.
Another fact of the matter is people want to know that they are going to get something for their money. If they haven't heard of your company before, they want to make sure they aren't going to just be donating their money to an experiment in SEO. Granted, if you are Brett T. or Danny S. you probably can go to a client and say, "Trust me. I know what I'm doing." But for the rest of us, we need to give our clients something they can hang their hats on.
I tried an experiment in pricing for a while that simply offered a setup and maintenance approach.
I got no sales.
I put out a lot of quotes but no one wanted to risk it.
And honestly, the reason I did it was because I felt like I could offer a higher level of service. I could do more in-depth keyword research. I could test the validity of phrases in greater detail. I could make a much more solid link popularity plan. But it looked much more like a gamble for the people I offered it to.
So I went back to the Guarantee for positions achieved. But now my approach is to keep that package a low amount. My goal is to under promise and over achieve. Then I can offer them a much more detailed maintenance package on the back end after I have established a strong trust.
If I can establish a plan up front that the client likes and then I fulfill what I said I would, then I have established a trust. Then we can go in and develop a more long term approach that is going to give their site a wide exposure that is highly valuable to their business.
I have begun a competitive market analysis of SEO companies. But it's complicated without really knowing how they go about their business: What pages they optimize, what phrase they choose, why they chose them and on and on.
Unfortunately, this is not a black and white business as far as approach is concerned.
The SEO either gets more business for their client or they don't. But how they go about it is a whole other can of worms.
I'm not sure exactly how to go about determining what the most ideal approach is. I guess we all could just infiltrate iprospect.com and figure out exactly what they do. Their model apparently has seemed to work. But even that is a subjective experiment.
As far as what to charge, I've run into many companies that are shocked at what I'm charging. That usually has to do with probably marketing to the wrong niche.
I have also run into companies that I can tell would feel a bit better if a charged more.
I have begun to separate my 3 market segments: Small, medium and large companies. They all have different needs and expectations. They are all important to establishing a strong company.
I've been in this particular part of the web business for about a year. I've still got a lot to learn. But I think the only really clear way of learning is through trial. I'll still collect information of other SEO's because it keeps me aware of my surroundings.
What I've learned so far is people want to know they are going to get something for their money.
They want someone that can explain to them what is going on. They have come to our company because they don't know how to make the engines work for them.
They simply want some sort of island in this crazy ocean of the internet.
If I can give them a foundation they can trust then I'm on the right track.