A great approach. But again, it's marketing.
How many marketing firms now have SEO departments? It's certainly growing. Fundamentally SEO
is marketing. Its about bringing the website to the attention of as many people as possible and then getting them converting (I'm not talking about SEM).
Even if you were on a retainer, you can't just go and decide to run such a competition in the customers name. Sure you can suggest the idea, but how many biscuit manufacturers hand their marketing lead to the external web developer? Great idea - on that would get mentioned in an regular review. Not one you would run within the 1st 3 months after launch.
I make sure to have a meeting with each client once a month, at the same time as handing over the report of what I've done that month and my invoice, to go through what I plan to do in the next month. I have minimum hours each month, which I tend to use for the more normal SEO activities, but quite often I'll also encourage them to pay for an extra X hours that month to do X or Y idea. Sometimes they'll just ask me to do whichever concept I've come up with out of my normal hours for that month - so I'll do a little less linkbuilding etc that month. One thing I've grown to expect is clients changing their mind about what they want from month to month - so it doesn't surprise me when in month 2 they say 'Why is nobody looking at X, I want to sell loads of these' when they've never even mentioned them before - I might suggest a microsite at that point.
I could be wrong, but I'd speculate that the vast majority or sites (not companies) are fairly static.
The vast majority are - if they weren't the the sites that aren't, that have good SEOs on board, would find it much harder to out-rank those other sites.
If I am wrong, it means that you'd only have a portfolio of half a dozen clients and you'd be incredibly rich. Every site you develop has built-in residuals; after half a dozen sites have been developed, you'd have no time in you working to do any new developments; you'd be spending all your time doing SEO and running their marketing campaigns.
I don't do much development and mainly SEO at the moment (I've previously worked in an SEO department at a big developers). Web-development I see as a way to get the customer in the door - SEO is where the money is though.
How often do you run these reports and how much do they pay you?
I present a report of activity for that month, which compares it to the month before and flags any new trends, each month. I charge my normal hourly rate for doing so on the basis of whilst it's not difficult to generate these reports, the skill is in making use of the data in a way that's more than just saying 'great we got more visitors!'. Nobody's ever had a problem with this - especially as the reports never usually take that long to prepare.
A company I work for was in the position of actually not wanting to generate any further business... Ok, it's an unusual scenario, but my point is, not every site is a new Amazon.com, or a new Digg... For some companies, websites are like printed materials, advertisements or telephone lines - another means of communicating with customers.
Oh I absolutely agree. It is unusual for a business to not want any more customers, but equally not every website is a new amazon. In fact none of my clients at the moment has any direct web sales - they all provide services of a type that are unsuitable to be sold without speaking to the person first or are charities - yet they are still trying to convert. I can't think of a business (except one that literally that cannot take any more customers) that is not looking to convert customers. The companies I currently work for could just have a website listing their services and contact details - but that wouldn't get anyone finding their website nor contacting them. The fact that the website's appear near top of the SERPS for competitive terms, that I've helped develop ancillary free services etc, means that people go there and thus they have more customers.
Back to the OPs post; his client is probably a new startup or a cottage industry. £600 for website and hosting is possibly a small fortune to them.
£600 isn't
necessarily that much. If the OP is really concerned that they wont bite offer a CFA whereby certain bonuses are attached to either visitor numbers or (more likely) levels of conversion. I don't do it any more because it's an added complexity that can be annoying, but offering a customer a low rate and then saying that they only have to pay you your 'regular' rate if it works out well for them proves you have confidence in what you're doing.
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I see were you are coming from. I never knew it involves so much money. Sounds like a lot of people are doing it. How hard is the job? 
