How to Make Money Knitting by Charging What You are Worth

How do I start a knitting business? Can I make real money by knitting? How do I price handknit items?

If you are looking to take your knitting to the next level and begin profiting from your talents, these are probably only a few of the questions you are asking yourself.

I have good news. You are in the right place to help answer these questions and questions you didn’t even think to ask!

I have been knitting professionally for many years and have learned a lot along the way about how to charge for my time, materials, and experience.

There is no one right way to go about setting up your knitting business. But learning how to start out on the right needle will give you an advantage to earning higher profits faster.

You will need to adjust your business plan along the way as you learn more about your audience, but here are some tips of where to begin this wonderful journey!

How do I start a knitting business?

My first tip for beginning a knitting business is to be sure your skills are at a strong enough level to justify a higher price.

This means that you want to be sure you have even tension in your fabric, your finishing is well executed, and you are using a quality yarn that will wear well. It should “wear well” in two ways:

1. The yarn should knit up nicely and not create flaws in your fabric. Inexpensive yarn isn’t spun very well and will absolutely look and feel cheap. Using low quality yarn will not help justify a healthy profit margin and it won’t help build your brand. I’m not saying you need to use cashmere, but choose yarns that knit up beautifully no matter the stitch pattern or garment type.

2. The yarn should be well made so that it will last after being worn and washed for many years to come.

I can tell you a few things about cheap yarn:

• It will look cheap.

• It will feel cheap.

• It will not hold together for more than a season (if you’re lucky).

• It will not show good stitch definition.

• It will not photograph well.

• It will not finish well.

• It will turn off your first few customers and could lead to bad reviews.

• You will not gain a loyal following or repeat customers.

Need I go on?

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What yarn should I use when starting a knitting business?

To begin your knitting business journey, I recommend using yarns that are well made, have really good yardage, and come in a wide range of colors.

Here are few yarn options that are good quality and really reasonably priced:

• Berroco Vintage Worsted (Great for baby items.)

• Berroco Vintage DK (Also great for baby items.)

• Cascade 220 Superwash Merino (Great for accessories such as hats, scarves, cowls, etc.)

• Plymouth Yarn DK Merino (Also great for accessories and well priced for larger designs such as blankets or sweaters.)

• Cascade Noble Cotton (Great for market bags.)

• Cascade Nifty Cotton (Great for dish cloths and towels.)

What type of knitted items should I make to sell?

As you are figuring out who your audience is, begin with knitted items that don’t require a huge financial or time investment.

Baby items are quick and people are happy to spend more money on a baby gift.

You can also begin with smaller giftable items such as hats, dish cloths, coasters, headbands, or fingerless gloves.

Start small so that you aren’t asking for a huge investment from your first potential customers.

Please, do NOT knit up other designer’s patterns if you do not have permission to sell items made from their patterns. This is a REALLY bad business practice and does not give your business good karma.

Either design your own patterns, ask the designer if you can sell items made using their patterns, or check the pattern copyright rules. Some designers are fine with you making items for sale using their patterns. If you do use another designer’s pattern - be sure to credit them in the item description and link to their pattern.

Do not start your business off by cheating another designer. It’s really not okay!

Is the knitting business profitable?

Short answer: Yes!

Can I make a career out of knitting?

Short answer: Yes!

But you need to be smart about how you price your pieces from the beginning and you are willing to pivot your brand to fit your ideal customer as you learn more about them.

Before I get into how to price your items, understand the importance of setting that first “buy now” price. You can always put your pieces on sale, but raising your prices too much or too early is a lot harder to do successfully.

This is not a business that happens overnight. And you will make a few mistakes along the way. But learning from your mistakes, refining your brand, and solidifying who your audience is will be important lessons learned along the way.

When I first started selling my finished pieces, my intension was not to make knitting a business. I just wanted to cover my yarn addiction expenses!

You need to be sure and decide if you are knitting as a hobby or as a business.

If you are okay with just breaking even to cover your yarn expenses, then this article is not for you.

If you are wanting to make real money that will bring in actual income - keep on reading!

A very young Krista working on my first knitting project. Truth Bomb: It was really not pretty!

As I was refining my knitting and finishing skills, I never dreamt that someday it would become my main source of income. (Read more about How to Knit or Crochet for the Film Industry here.)

I know how lucky I am to be able to make real money knitting, but the money didn’t come overnight and it took a lot of bad pricing decisions to learn how to charge for my experience, time, materials, and worth.

I am definitely proof that you can make real money knitting with great profits and create a lucrative career.

But be very conscious about how you set your prices. I’m here to help guide you along the path to setting prices with a positive profit margin.

How much should I charge for hand knitting?

My simple formula for calculating how to price knits for sale on Etsy or other similar sites won’t break your brain, but it will pad your bank account and give you a viable business income.

It is beyond frustrating to see what many people are charging for their knitted goods. The belief is that you have to keep your prices low or people won’t buy. But that is absolutely not true.

Remember that you cannot control what other people are charging for their goods. You can only control your own prices. So don’t get caught up on the, “But they are charging half of what I am,” self-talk. Find confidence in your own pricing and know that you never need to justify your prices to anyone but yourself.

Finding customers that are willing to pay you not only for your knits, but for your talent and experience is the most important part of making a real income from this craft.

The conversation around what to charge seems to be a hot topic for discussion these days. This is most likely due to the popularity of websites such as Etsy. As their website continues to expand, so does the range of prices people set when selling their hand knit goods.

Many people have their own opinions on what they should charge based on their own personal experiences.

What I’m sharing is my personal opinion based on my many years of professional experience.

I have created a brand around my business and I promise that I have never sold a pair of hand knit socks for $12 (Which I have seen listed on Etsy and makes me very sad!).

Before I get to the formula that I use when pricing my finished knits, I want to remind you of a couple of important things:

• Know that you are worth your time, expenses, and experience. I’m going to say that again. You are worth your time, expenses, and experience!

• There will always be someone that charges less than you. But on the flip side, there will always be someone that charges more than you.

• You need to ask yourself if you want to run a business or support a yarn addiction with a hobby.

• You need to decide that what you charge is worth it to you. If you are going to be upset about the price you are selling an item for, then your price is too low and you will only resent the work. (Knitting should be fun!)

How to price your knitwear.

Here is the math simply put: hourly rate + materials x 2.25 or 1.8 (more on those numbers later).

Calculate Your Hours

Start with the amount of time it takes you to make the item. Let’s use a bulky hat as an example.

Sit down and honestly time yourself – how long does it take to make that hat from start to finish? Don’t include the time you spent on your phone checking your Instagram page or getting up to take care of the laundry.

What is the real time it takes you to make that hat from start to finish? And don’t forget to factor in the finishing time! Weaving in tails, sewing on labels, and blocking takes time and is part of your labor. (Of course, only charge for the time it takes to set up for blocking, not the actual drying time!)

I usually time myself making the same piece three times and then take the average.

I will knit anywhere, but I only calculate my knitting time when I’m in a distraction free setting - like on my couch…not on a mountain top!

You would be surprised at how different the times can be based on a lot of factors.

Keep in mind you might make a small mistake and have to rip back a few rows. Maybe there is a flaw in the yarn and you end up with more tails to weave in. Somedays your fingers will be on fire as you fly through the project and other days you will work a little slower because you were up late the night before.

Does your hat come in different sizes? A baby size is going to take less time and yarn than an adult man’s size. I suggest you price the amount of time each size requires and price them differently.

Take those hours and multiply them by your hourly rate.

How to decide your hourly rate.

Your hourly rate can differ greatly based on many factors.

Some people suggest using the minimum wage for where they live, but I don’t recommend that as a default number.

What is your skill level? Is a person starting off at age 16 at their local Dairy Queen going to make the same hourly rate as the manager of that establishment that has been there for five years? I really hope not!

Arctic Circle Hat. Click image to learn how to make this hat!

If you are a new knitter, maybe you are closer to that newbie base pay. But if you have been knitting for many years and paid to take classes to learn new skills and up your knitting game, then you deserve to be paid more per hour for your time and experience. (You can really up your knitting abilities by joining The Knitting Rockstar Academy where I teach a plethora of finishing techniques to be sure your knits are flawless!)

So let’s say you are making a one sized unisex hat and it takes you 2.25 hours to complete. You have been knitting for a few years and taken several classes to expand your skills. Your wage should be higher. Maybe you are comfortable with $15/hour.

x hours times hourly rate = labor cost

2.25 x $15 = $33.75.

What are your materials costs?

Now factor in your materials. What was the cost for your yarn and any other materials (pom poms, beads, etc). Don’t factor in your stitch markers, tapestry needles, and knitting needles, etc just yet.

If you used a coupon or purchased your yarn on sale, use the full price you would have paid. Just because you got it on sale once, does not mean you can get the materials for that same price again, so don’t short yourself those costs from the beginning.

While you do use a lot of materials when knitting, only calculate the cost of the materials in the finished piece (yarn, pom, beads, etc) and not the tools used (needles, stitch markers, etc)

The exception for this is if you know for sure you can get your yarn for that price every time.

Maybe you have a wholesale account with a yarn brand and you know that you will always be able to get it at that wholesale price. Charge the price you know you can always pay for that yarn. Don’t factor in shipping or gas to get to the store. Just the full price for that yarn.

So for our hat, let’s say we used a skein of yarn that was $6.99 + 8.5% sales tax = $7.59 (always round up). So now you are at:

labor cost + materials cost = your base price

$33.75 + $7.59 = $41.34.

A side note about materials. I highly recommend you really contemplate what materials you want to use because the quality of the materials will affect how long and how well your end products lasts.

Yes, you can get a ball of yarn for $2.99, but it is probably acrylic and very poor in quality. Wool is relatively inexpensive these days and you can get decent wool for not much more than that acrylic. So if you have the option of buying a synthetic fiber or a natural fiber for just a couple of dollars more, go for the higher quality yarn.

In the end, those few dollars will really be the difference between having repeat customers because the knit lasted so long and someone that goes to someone else next time they need a knit hat because their purchase fell apart after one season.

Where are you going to sell your knits?

Here is where you need to make another decision. Are you going to be selling this hat to boutiques for a wholesale price? If so, multiply your base price number by 2.25. Most wholesale markup is twice what they pay. If they sell something for $40, they most likely bought it for $20.

You are adding that extra .25% to cover the costs such as gas to the store, shipping, expenses for your needles and notions, etc.

If you are selling a hat that will also be sold for wholesale, here is your final calculation:

Base price x wholesale markup = your retail price

$41.34 x 2.25 = $93.02

Make it a pretty number like $93.99 or $94 – whatever you think looks best. For a hat that retails at $94, you would probably sell wholesale for $47.

If you do not plan on selling wholesale, then multiply by 1.8.

This extra .8% is what gives you a profit margin.

It also covers all of the other things that your business takes (and it’s a lot!). Time to go to the store and pick up the materials, time to put your finished piece up on a website for sale, time packaging it up to be sent off to its new home, time it takes to drive to the post office, etc.

This also covers your materials that aren’t a part of the finished piece. Needles, stitch markers, tape measure, etc.

Click the image above to learn more about my Knitting Across America project!

So if you are not going to go the wholesale route, your hat is now:

Base price x your markup = your retail price

$41.34 x 1.8 = $74.42 (or $74.99 or $75).

Be sure to keep track of all your expenses for those valuable tax write offs!

Things to remember.

You are worth your time! Your skills are worth money! You deserve to be paid fairly for your hard work.

Here are the things I hear people say:

• “Why would I pay that when I can buy a hat at Target for $5?”

• “I wouldn’t pay that much for just a simple knit hat!”

• “You would sell more if you lowered your prices.”

• “If I give you yarn, will you make this sweater for free?”

People that say these things are not your customer! They will most likely never buy from you no matter your price because they do not value or appreciate the cost of what goes into making a handmade item. 

Yes, you can absolutely buy a hat from Target for $5, but nothing replaces a handmade piece. You can buy Chips Ahoy cookies for $5, but will they taste as good as grandma’s homemade chocolate chip? Definitely not. If they are looking for fast fashion, then they are not your customer. Don’t waste your time trying to please them.

Italy Hat. Click the image to make this hat!

Would you rather sell 20 hats for $15 or 4 hats for $75? You would make the same amount of money.

It’s not about the quantity of hats you can make, it’s about making quality pieces and selling them for what they are worth.

Really think about if you want to eventually sell wholesale. You might think right now that it is not a route you want to take, but as your business grows, you would be surprised how appealing it is to receive an order for 15 hats, whip them up and just cash a check. You don’t have to photograph them, put them on a website, send out emails to your customers. It’s a quick check to cash.

You don’t HAVE to make that decision today, but if you are selling your piece for $75 and a boutique randomly emails you wanting to purchase a dozen for wholesale, you can’t suddenly up your price to $94 overnight.

The other upside in automatically pricing your pieces for the 2.2 markup rate is that you can have discount sales easily and not cut too far into your profit. By having the higher price already, it is easy to discount for holidays or end of season sales.

I can’t even go on Etsy anymore and look at what people are pricing their knits for because it only infuriates me. When someone undercuts their prices, they are undercutting themselves and every other maker because they are taking away our value as hand knitters.

All of your years of knitting are years of experience. Make sure you charge for that experience!

One last thing. Don’t ever try and justify your prices to anyone. Just like arguing politics, you won’t ever be able to convince someone why your price is worth it. You do not need to justify your worth to anyone.

If someone asks, “Why are your prices so high?” Just tell them it is because you are awesome and your product is awesome and worth every penny. If they don’t appreciate your awesomeness then they aren’t worthy of your knits! 

At the end of the day, the only person that needs to be okay with your prices is you and you alone.

As a side note, when I knit pieces for the film industry, I only charge my hourly rate plus materials. I don’t add in any mark up because I know I won’t be producing more of these pieces for the general public and often I can sell the patterns to make up the difference.

I also consider the press I often receive for having knits in a movie or TV show worth it to not try and make a few extra bucks from a costume designer. It is also common for me to negotiate a deal with the costume designer for a price that fits into their budget.

But that is an entirely different blog post! Be sure to read this article if you are curious about knitting for the film industry!

Happy Knitting!

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