I am sure this is a common question for every SEO firm and it sometimes difficult for the perspective client to grasp when you tell them no. I wanted to have a lengthy blog post about why we don't guarantee rank, but then I ran across an article at SEOmoz called "Why Reputable SEO Firms Don't Promise Guaranteed Search Engine Rankings". Rand Fishkin, the author of said article, explains the subject so well I do not want to steal his thunder. His main points of the article are:
SEO & Guarantees Have an Abominable History - many SEO firms have used this as a sales pitch to lure in unsuspecting customers, but what sounds too good to be true, usually is. Many times these businesses use black hat tactics and deceiving reporting methods to show your #1 ranks.
The Search Engines Warn Against Guaranteeing Ranks - specifically Google. There are no SEOs that have a special relationship with Google, Period.
Rankings are Just Not Stable - Even though you may have a great rank for one search, doesn't mean you will be in that position for the same search at a different time or location. Often times the search engine results will change if you click refresh.
Rank is a Poor Metric for Performance - This is my #1 reason. Just because you may have a certain rank, doesn't mean you are increasing qualified visitors. By increasing the amount of quality traffic, you in turn increase conversions which drive more sales. A search engine rank will not pay the bills, customers will.
It is Unethical to Promise Something You CANNOT Control - There are strategies to increase position, traffic, and conversions...but these strategies are not law. They need adjusted as often as a new competitor joins the race and whenever an engine algorithm changes. SEOs do not have control over what happens in the search engine ranks!
Please read the article, it is by far the best I have ran across regarding this issue.
Although we do not "guarantee" rank, we stand behind our work. If what we do does not work, we do our absolute best to fix it. As we have said before, we are an extension of your team...and no one wants their own team to fail.