Ok, this might sound a bit funny - an SEO telling you how to pick an SEO but I know my fair share about SEO and how it works, and I've been doing it for a long time (since 2001), so I'm bound to have an opinion or two! Here is how I evaluate an SEO company or service when I come across one:
1. What do they have they say about SEO? Is it just a few pages of content on SEO? Maybe it's just a single page on a website offering a range of services. SEO is quite a broad and in-depth subject, so having a content-thin site sets off some alarm bells.
2. Do they have a PageRank - PageRank can be a funny thing but if it's zero, it could be of concern - an SEO should have at least some PageRank (0-10, 10 being best)
3. I check to see if they rank - can they be found - for their town/city and county? Do they rank nationally? I check a number of search terms - SEO, Search Engine Optimisation, SEO Dublin, SEO Ireland, SEO Limerick etc
4. What is their portfolio like? When I visit their clients, do their clients rank? Do they rank well?
5. I get very concerned when I see on-site pricing models. SEO is about competition - "property" or "Pensions" as search phrases are highly competitive. Giving different pricing levels without first evaluating a site seems pretty impossible and optimistic to me at best.