The other side of students being customers is that they will see a passing grade as something they have paid for and should receive, not something based on merit. If you paid a lot of money for a course but didn't get a good grade are you more likely to blame yourself or blame the teacher? More likely to give good feedback to a lecturer that gave an A because the course was easy or to a lecturer that gave a C for a very challenging course? Are people more likely to pick courses that have a reputation for low marks, or pick one where they will get better 'value for money'?
The result is grade inflation and it has been well documented:
They then attribute the rapid rise in grade inflation in the last couple of decades to a more “consumer-based approach” to education, which they say “has created both external and internal incentives for the faculty to grade more generously.” More generous grading can produce better instructor reviews, for example, and can help students be more competitive candidates for graduate schools and the job market.
Abolish grades. Teachers are there to teach. Employers are there to assess and hire. You're just looking at it from the same old perspective.
Let me give you an example. I teach programming privately. People pay me $100/hr. Some of them found jobs thanks to my lessons. Some of them realized it's not for them and they didn't waste tons of money and time. And I've been doing this long enough to say there's a demand for my services and people generally like it. I don't grade them, I give them useful feedback on what should they improve and if they should continue. My primary goal is their success, not some stupid grade. Market works great if you apply it right.
As for how to get into the business... I posted a submission on a popular (Russian) programming site offering Ruby and RoR lessons. 2 years later my post is Google's search results first page. Then I started doing Ruby and RoR screencasts in Russian, they became #1 in Russian. That brings even more people. It's not a lot of money, mind you, but at some point I even quit my job completely and went to Thailand for 6 months. I'm thinking of stopping doing it, because frankly, I'm just tired of teaching. For now.
I wanted to make more money. So it was really selfish. And I wasn't good at teaching right away. What kept me on the way to improvement is also money. I knew that if I don't provide value to my student, he'll leave. If I act like a jerk (trust me, such a temptation sometimes), he'll also leave. So I just did the best I could to keep earning the money.
That seems pretty simple to solve - just decouple the courses from the grading process. Let the teacher specialize in teaching and let some other firm that specializes in testing rate/certify your resulting competence or lack thereof in the subject.