Well fair enough.
My point is that, where SEO companies are confident that their services will result in higher sales, then offering services on a commission basis should be a viable business model - IF they're as sure as they make out.
Getting the rankings wouldn't be a problem if you allocated the necessary resources and obviously knew what you were doing, so I'm not sure that that aspect would be an issue. Unless of course you were trying to rank a niche that was beyond your skill level, but then you wouldn't take the job on in the first place anyway.
I'm sure that some probably do make that kind of arrangement with their clients, but IMO it's a flawed model. The reason being that too many things would be out of the SEOs control, things that would potentially dictate how much they got paid for their time. The SEO would have no control over how their client runs their business, especially their sales funnel, so a lot of money could be lost (or not earned) from that aspect. Or as a more extreme example, they could go out of business before the SEO work was complete and leave the SEO high and dry.
The other reason, is that it's not really worth an SEOs time to do all that work up front without financial gain. I mean, decent off page SEO that will give long lasting results is (very) time consuming, as is restructuring a site, optimising all the pages correctly, sorting out the internal linking, and all the other onpage stuff. Obviously you can outsource some of it, but IMO for most tasks the more you do that, the more the quality tends to slip anyway. There's also the financial outlay to consider, and I can't see anyone good at SEO taking on all that risk when they could just work elsewhere and get paid for it (or just do it all on their own).
That said, it could probably work as some kind of partnership agreement or joint venture, if you like, but I think that expecting an SEO to finance the growth of your business just because you've had some bad experiences in the past is probably a bit of a stretch to say the least.
On another note, I actually agree that many small businesses are wasting their time / money using SEO as a way to market themselves, as most will struggle to get a return from it, unless of course they buy cheap services, which will inevitably lead to failure at some point (and more conversations like these).
Don't get me wrong though, I'm not defending SEOs / SEO agencies, as I've had my fair share of bad experiences in the past as well. Just really playing devil's advocate...