Recently I have been getting inquiries on direct ad sales. Mostly people are interested in a 125X125 block in my sidebar. The problem I have is that they are really just SEO companies and they want to buy text links out disguised as images. I don't necessarily have a problem with this but I think I am way undercharging. I am negotiating with someone now who wants to cram FOUR dofollow text links into that 125X125 box for the same price as one image. What is the best way to handle these kinds of requests and what is a good rate for a keyword text link from my PR5 site?
I would suggest doing what the experts do. Check out your toughest competition in your niche and see how much they are charging. Then compare. How much of a traffic advantage do they have over you? Make a reasonable adjustment and sell accordingly. Don't be afraid to negotiate. If you raise your prices and your customers balk, simply offer them a "special". Go a little lower and let the results speak for themselves. If traffic from your site is bringing in a profit to your customers and you still manage to be less than your top competitors, few will complain. And if those few do, they are simply being cheap.
One more thing. You can always offer your best customers a special price to do a site review for you. Testimonials can often work better and faster than negotiations.