Offline Marketers + Consultants: Payment Contracts or Month-to-Month?

Which services are you talking about?

Webdesign usually involves once off costs while SEO is on-going.
Then we have email marketing campaigns which is also recurring but can also be once off.

What are you referring to?

SEO mostly. Maybe video and email marketing, basically any reoccuring charge

Month to month. no contract and no end. Over-deliver value every month.
(doesn't mean you have work on a deal every month, but I do make sure they are busy)

Some companies get a big up front amount and then go month to month. I size up the operation, charge a monthly fee from the get go. I do some initial stuff in month one to jump start business if they are having a hard time of it. That usually doesn't cost anything but time, outsource some in month 2 and just keep building. if they are paying $1500 a month, in 2 years you've grossed 36k. 90k in 5 years. They stop, you haven't lost anything, chances are they have.

If they are in a really bad away and you have to start lower, it can go up as the sales you bring them increase. I have actually started with zero, taken a chance on someone. They were done. The appointment after me was with a bankruptcy lawyer. (Not like a contract would have made a difference.) Outsourced an e-book with my own money. Did a mailing to the customer base. Got enough biz to make it a bit longer. They can a least pay me now. Lol. another emergency measure in late January or Febuary and they'll get thru the winter. In the biz they are in, that gives them a busy summer to get back on their feet. Yeah, maybe it is next to charity work, but 4 guys with families and kids in school count on this company staying afloat and busy enough to pay them. You know, if he never is able to pay me another dime, or couldn't have even paid for the money I out sourced, I don't care. I'd do it again.

A customer ends the contract, odds are their business will suffer, there are a lot of (...how can I put this nicely... I can't...) out there.
If they are unreasonable, I can fire them. Another reason not having a contract is good.
I keep every clients 'stuff' in a single file
if the relationships ends, I hand over the file. I am done.

I am new to this so have never had an unreasonable client yet nor been replaced.
As the few I do have are able to directly attribute a spike in SALES to my efforts, I cannot foresee them doing so, but who knows. The sites I make for people are simple, full of information and sell the service (do Dan Kennedy style off-line campaign(s), so sometimes it looks corny, but damn if corny doesn't work. The sites are 'approachable' and non-corporate on purpose. People like to do business with people.

(have a client, received a letter from an 'SEO' company. Offered him page 1 rankings in competitive niche with 5 keywords. I looked at the keywords. Ran a quick adwrords campaign on a couple got 100 people willing to answer the questions which were basically what are you looking for? and a few other questions. None were looking for the client's service. Most were college kids researching a paper.
This same 'SEO company said to my client that the site sold too much, that it would never get a client to call him. I guess the 'SEO' company forgot to tell that to the 4-8 calls a month the site produces. Maybe what they were going to do would have made more sales. I don't know, not with the keywords they were using though, that's for sure. The last two sites built by 'professional firms' that employee teams for every aspect of the business brought him a grand total of zero calls, zero leads. Their sites were prettier though. More 'professional. Built using $2500 programs. I like using free ones, heck I like using free anything that doesn't sacrifice effectiveness or security. They were paying $10+ a click on adwords I am paying .25 to $2.00 for the same words. The new site is under a month old and hasn't even begun to get tweaked. I have already cut his adword budget in half and it produces more clicks than when it was double.)

Get this: Amazon.com: Outrageous Advertising That's...
Swipe and convert to any niche. In the world of ADD this stuff works. It is more expensive, but converts higher. Your very own secret weapon to never end a relationship. A client can be a client for life. A client SHOULD be a client for life.
If you increase a client's net 30k, how many complain about your measly $1500.00 bill?

Ok I am rambling

Wow DogScout, thanks for the very detailed and clear response!

Additional Q for you:

Do you have your clients in an automated billing (i.e. credit card automatically charged each month as per agreement) or do you send out an invoice each month and wait for payment?