Willa,
I agree with your comments that basing
SEO on value is the way to go. it all comes down to ROI. If it delivers the client value, then the fee is worth it.
I've seen agencies develop $500k websites that are poorly optimized and that don't convert very well. And the client does not know any better. I've also seen them pay higher pay per click rates because the website does not convert well.
Having the right keywords is the foundation to any website. Paying $100K for an
SEO package is a better investment than a poorly optimized website that costs $500K and does not convert.
Cheers
Carol