I think from the business standpoint, each level is better than the other. When tasks are completed on an hourly basis or maybe a flat-project rate, the seo does not have motivation for getting the best results and can just sign-off on the project after a certain point, and wash their hands clean of it. So the more a professional seo is vested into a project, the better the results, albeit more expensive of a service.

@George – yeah we find the more you learn the more you find industry-specific vertical sites that are good sources for links and for networking / promoting your site or service in that area. That takes time. We include this as part of our monthly fee, so no we don’t not bill this out separately. For me, this is essential to providing a good service. I would feel as though I were robbing my clients if I didn’t take a little time to educate myself on their industry in general, particularly popular websites, etc.

I agree. By taking the time, you’ll not only better understand everything that the client offers and how to leverage it, but also understand better who their target audience is. But do you bill this out as “independent research” or do you itemize it at all?