Throwing myself in the fire - Ethical or Not?

Some agree, most will probably disagree, so be it.

Scenario:

A client signs up to my monthly service, after the 1st month he doesn't see any results, and ask me why that is, I find out that his anchor profile is heavily over optimized or that his site is dealing with tons of issue's like many eCommerce sites deal with.

I offer suggestions to fix it and once fixed (sometimes as drastic as moving the site to a new domain) I can move the already build links to the new domain.

First client is disappointed, after that once fixed the client turns into a client for life cause I go out of my way to help him.


The ethical part:

I could've done the analysis first to not waste a month of link building (although never totally wasted as we move or adjust links where needed) but still.


However

If I point out the issue's first then I'll most probably lose the client right away as some might not believe their site has issue's, while a month of link building is kind of the ultimate proof when it doesn't work, also a confirmation for myself that the site deals with issue's.


Bad links some say

Sure they are not the most natural ones however high PR links always work, no doubt about that, heck I rank my own crappy affiliate sites with only high PR blog posts at one of the cheapest networks that I own. As long as they do fine then every site can do fine, simple as that.


End conclusion

IF I would inform clients on forehand that there's little to no chance their site will rank I would have to say no to about 50% of my new clients, and still spend an insane amount of time on typing emails back & forth to get them a clean start without getting paid a single penny and no guarantee that they will become a paying client once things are fixed or not as there are no guarantees in fixing penalties as it all depends on Google and the customer itself to make the neccessary changes so to many variables I can't control.

This 50% number isn't made up btw, it's really that worse. Why? Cause most people find me through this and other forums and have bought package after package so a huge part of new sign ups already deal with a Penguin penalty.


Is this unethical?

I think it's not the most ethical thing to do but it works out really well for me cause once I go through the dust to help the client the relationship improves hugely and it turns into a ton of mouth to mouth advertising. It isn't for nothing that 90% of my business comes from repeat business.

So unethical or not, I care less to be honest but still would like to hear other people's thought so shoot me if you like