Help needed: Structuring an Auction for a High-Ticket SEO Agency (High COGS challenge)

Hey everyone, I’m working with a new partner and need some brains on how to structure the backend offer.

The Business:

Niche: High-end "AI SEO" / AEO (Answer Engine Optimization). They rank businesses on ChatGPT, Gemini, and Google’s AI search.
Price Point: Monthly retainers ranging from $2k to $40k/mo.
Economics: Margins are approx 40%. (e.g., A $2k retainer costs them ~$1,200 to fulfill due to manual outreach, link building, and content costs).
Current Assets: 10 years in business, huge organic inbound traffic, but zero email list/CRM (they never built one).
Distribution Strategy: We plan to partner with an E-com/Growth community owner since the client has no distribution of their own.

The Problem (The "Consolation Prize"): The auction model relies on giving a "gift/credit" to all non-winners to bridge them into a mid-ticket backend offer.

Because this is a service agency with high fulfillment costs, we can’t just give a massive credit toward a service that costs us money to deliver.
The client does not have a digital course or low-COGS info product ready to use as a backend offer.

The Proposed Workaround (Is this viable?): We are thinking of creating a "Lite" backend offer specifically for the auction runners-up:

The Offer: A "Foundational Organic SEO" package (Traditional SEO, not the high-end AI stuff).
Price: Sell for £1,000 (approx $1,250).
Cost: The client has a secondary team that can fulfill this for £500.
The Math: We give runners-up a £500 credit → They pay £1,000 → Cost is £500 → Profit is £500.

My Questions for the Group:

Has anyone run an auction for a Done-For-You agency where margins are tight?
Is a £500 margin on the backend "consolation" offer enough to justify the effort of the auction?
Should we force the client to build a pure info-product (e.g., "DIY AI Audit") to maximize cash flow, or stick to the service offer since that’s their strength?

Any feedback on how you’d structure this stack would be appreciated!

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