Thank you kickflip. I was just trying to do what I felt was right, I know a intelligent response to my dilemma deserved some kind of reward, I wasn't in any way trying to put a price tag on anyone idea though.
But anyways, again, thank you for all of your suggestions. Here is what I have so far thanks to you guys:
1) get franchises - offer discount on "headquarters" seo for every franchise location that signs up
2) back door - offer a different, but still internet marketing related service which isn't saturated, upsell them on SEO later. Like Kickflip said, I am trying to bring in money for the firm, thats the goal even though it wasn't the assigned task.
3) niche websites - ex: rank a website like dentalmarketing.com, put pages on that website targeting every major US city and collect leads by offering something for free (ex: site analysis) & contact box. OR rank a website like dentistlosangeles.com and lease it to people.
4) free seo analysis - use free tools to make report, tell them what needs to be changed/how their site would benefit from doing some SEO, build a relationship, sell SEO package. OR make a branded web app which gives an analysis in exchange for their contact info
5) seek adwords users - scrape the internet and cold call ideal clients who are using adwords. (how do you do this though?!)
6) partners / affiliate marketing - partner with web designers, graphic designers, local printers and have them offer their clients SEO, but outsource to us.
7) seo - rank our website. prove that we can do SEO at a high level. motivated buyers will find us and hire us.
8) cold call groupon, living social, money mailer businesses who have probably had a bad experience w/ couponing sites/direct mail.
9) do something nice - rank a non-profit organization and get featured in the press
10) become a "guru" or authority - ranking high on google doesn't always get you clients. but standing out from the crowd will help. If you build your brand well enough, you will get more clients because of it, versus ranking high on google.
11) attend conventions / conferences - meeting people in person is easier when it comes to building solid trusting relationships. if they have the money to attend the conference, they probably can afford to buy SEO.
12) door to door - contact people/decision makers, ask for a 30 min appointment, not to sell, but to discuss how we can get them more clients. again, face to face will have a higher conversion rate.
hopefully, these ideas can help you guys in some way, shape or form, now or in the future.
Any other ideas? comments? additions to the ideas I have listed?
Keep them coming!