Do you get phone calls for your business from people who say that’ll put you on page one for your keywords with their SEO services? It can be difficult to determine which SEO companies can actually do the work they claim (and some of them make full-time SEOs like me just look bad).
Find out what their skills are before agreeing to anything. If you can determine that a company really knows what they’re doing, it can be worth the price. Good SEO is not cheap, but the revenue you get from solid listings on your primary keywords will more than make up for it.
I’ll say now from my own experience – anyone that guarantees position 1 (or even page one) listings in a set time period (or at all, really) is in all likelihood full of it. SEO is part of an industry that is constantly changing. To do it right, you have to keep track of how the search engines operate and adjust where necessary. Bad SEO may work temporarily, but in all likelihood will eventually make your listings drop lower than ever (or even get you blacklisted).
Shannon Rogers with Web Advantage put together a good list of questions to ask SEOs who cold-call you. If you can find SEOs who can answer these well, they may very well be worth the marketing investment.