Repost from http://blog.handsonwebhosting.com
It seems that more and more we're seeing questions regarding Keyword Density, what it means and how to measure it. Here's a quick synapses of keyword density and weight.
Keyword density is a percentage of the total words on a page.
If you have 150 words on a page, and you're using a keyword 7 times in that content, the keyword is determined by the following:
7 (keyword usage) divided by 150 = 0.0467 or 4.67%
The standard keyword density is between 3% and 5%. If you increase more than 5% you run the risk of having your page rejected by the search engines as you're essentially spamming your keyword to the engine. DON'T DO IT!!
Keyword Density can be naturally achieved in just regular content, and that's how it should be achieved. You can spin an article if you wanted, but be careful on these too as you can get banned from certain article writing/submission places.
Keep the keyword density to between 3% and 5% and you'll be fine. Keywords can be more than just ONE word, it can be "keyword phrase", and plurals count too. People don't search for "hosting" they search for "web hosting", and more often than not, they narrow that down to "linux web hosting" or "cpanel fantastico web hosting" or even "reliable linux web hosting with cpanel". Structure your site and pages to cater to these words, and you'll see your site climb in the search engines, and convert to traffic.
We use http://www.live-keyword-analysis.com
as they have a free keyword density tool. Give it a spin and make sure that you're within the limits of the 3 and 5 for ideal exposure.