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Let me say up front I don't want to discuss rates, and I'm sure Brett would appreciate avoiding any kind of pricing discussion.
Rather, as we transition to a market that is increasingly dominated by pay-per-click and pay-for-inclusion search models, and as content and linkage factors dominate legitimate SERPs, a new business model is needed for SEOs.
Certainly, one easy approach would be to convert to an hourly billing model. Another approach would be the "advertising agency" model, which bills by the hour or project, plus collects a percentage on all expenses. In our case, such expenses could be Overture costs, Ink & Yahoo fees, banner purchases, etc.
We hear a lot about how everyone is changing their technical approach to the changing world of SEO - I'm curious as to how WMW paricipants are refining their business approach.
As for the way to price the campaign. There are tons of SEO companies, and there are definitely tons of different pricing models.
I have seen some SEO companies that charge their clients based on the amount of traffic. X amount of money for X amount of traffic. Other companies will charge no initial price to sign, but will have a considerable monthly charge. Another pricing model is to have a initial optimization sign-up fee, with a reduced monthly fee.
I don't think that there is any reason to change from a business model, or pricing model if it has proven to be effective. Instead, build upon this model.
There could be an agreement between the client and the SEO firm that would allow the SEO firm to handle their Overture, Adwords, or other advertisements within the search engines and the Internet. One way to handle this is to have a set budget for either the entire package or for each individual aspect.
I do agree with you that it is no longer just SEO, and we have done some changing to keep up with the changes within the SEs. One of the things that we will do is discuss all possible opportunities that can act as a beneficial supplement to their SEO campaign. If we feel that a particular client can benefit from an Overture campaign than we will add a set amount of money to their monthly payment owed and use that to manage their account.
I don't think that the pricing model needs to be completely changed.....just add to the existing model.
We also use the advertising model, with a standard markup for services purchased.
Additional services are billed hourly if the client changes the contract or scope of the project. A line to this effect goes in every contract, as we have been burned in the past by this. Even on PPC work, we've gotten emails "Please add these terms to our account" -expecting no upcharge. --Sorry, folks, the clock in my office runs forward only, and does not stop for off-contract work.