Good SEO is priceless - in the right context.
I have been having a discussion with a fellow SEO’er over the last few days about how he should price work for a prospective client.
I personally prefer to work within a clearly defined set of goals, that are measurable and can provide palpable results. He was suggesting that his work for this client should be done based against earnings that the client would generate from his work.
I totally disagreed with him, for a number of reasons. Firstly, it is clear that many industries have high potential profits, for example, real estate (as was the actual case in point) - I know people whom have earned literally tens or hundreds of millions of dollars through good SEM (not strictly SEO), but the problem that you will encounter if you are pricing your job based on results is that there are far too many outside factors that are beyond our control as simple search engine optimizers.
Lets take an example: lets imagine SEO guy one provides a real estate office with the worlds best SEO, now their website is getting huge traffic, highly targeted towards buying properties on the Costa Del Sol, but the website is poorly designed - and thats the webdesigners fault, not the SEO professionals responsibility. Lets imagine then that the company has the worlds best converting website, and each hit results in 0.5 calls to the Realtor, well if their sales staff aren’t up to scratch then the traffic is again wasted. Even if the sales staff could close like no others, they might have no inventory to actually sell - as I am illustrating, pricing SEO work in the conventional world against sales results just isn’t an option as there are far too many obstacles between the surfer clicking and making a sale that are outside the remit of a Search Engine Marketer.
That is why my advice to him, and to any other SEO professional is not to get lured in by the promise of big bucks and bright lights (ahhh, those bright lights are sooo pretty though 
) - in the long run you are always better off clearly defining goals, and then delivering the results that you negotiate pre-contract. Examples that I use would be:
1) an increase in measurable inbound links from context sensitive sites (measured using yahoo LD)
2) an increase in total traffic yielded by certain PRE DEFINED keyword combo’s with a specified Google address (ie. google.com or google.co.uk)
3) an improvement in SERPs for certain keywords on specific google sites
4) an overall increase in traffic from all search engines, based on actual statistics for the months leading up to the campaign, above any organic growth.
Essentially, the problem is that Search Engine Optimisation as a product is quite hard to define, and unless you have it clearly mapped out in advance what your tasks are you might end up getting blamed for not providing increased sales, when you have nothing to do with the front of shop sales structure - or in other words - it always makes sense to have your customer understand what it is that you can provide, and charge accordingly.
Anyway, enough of my musings, off to have a beer!
MM
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