Keyword Density is the percentage of keywords compared to the rest of the text in your Web page. This metric is important because it gives you a tool to compare a Web page or site to that of similar pages with higher rankings. You can see how your use of keywords compares to theirs.

If you see a comparable keyword density between sites, chances are their higher ranking is due to inbound links and/or inherited page rank. If their keyword density is higher than yours, there’s a good chance you can increase your ranking with some careful keyword placement for organic search optimization.

Use one of the following free keyword cloud tools to check your site’s actual keyword density:

Visual Results
Use font size and bold-face to get a quick visual of what words have the highest density on the pages you search (without the actual statistics).

Keyword Cloud from webconfs
http://www.webconfs.com/keyword-density-checker.php

Keyword Density Checker from iwebtool
http://www.iwebtool.com/keyword_density

Statistical results
These tools give you actual number of occurrences, percentages of density and other key metrics by keyword.
 
Keyword Density Tool from SEO Tools™
http://www.seochat.com/seo-tools/keyword-density/

Keyword Density from Link Vendor
http://www.linkvendor.com/seo-tools/keyword-density.html

Compare two sites
Use this tool to see how your site compares to another.

Keyword Density Analyzer from KeywordDensity.com
http://www.keyworddensity.com/

What do you do with the information once you have it?

• Get a good understanding of what keywords are strongest on your site. You might be surprised that your organic content is pointing search engines in a direction you didn’t expect. Evaluate that and decide if you need to modify your copy and tags/titles, or if it’s something you should use to your advantage and build upon.

• Take a new look for competition. Try searches on the top keywords in the major search engines and see who shows up. Take a look at their sites and see if they truly are competition. Review their offers to see how they compare to yours. Also be sure to read the search engine results set for their site compared to yours…whose is more compelling? How can you change your copy to better grab the potential customer’s attention if your results were to come up side-by-side

• Compare keyword density with your known top competitors. This might give you an idea who’s more likely to come out on top in the major search engines (of course, keyword density is only one factor in the mix – don’t forget that incoming links, overall relevancy, etc., also determine page rank). Use the results to help prioritize the copy you need to tweak in the future, or maybe set your goals to build some new content pages that will make you a stronger competitor in those areas.

• Target online directories where you can submit your site and increase incoming links. To ensure you get approved for inclusion, have a blurb that clearly ties your site to that directory.