When I knit for people, I charge for the yarn, including tax and shipping if applicable. Then, I multiply the number of yards in each ball that I'm using times 2, 3 or 4 cents, depending on how difficult the pattern is (endless st st = 2 cents) for a "labor" charge.
So, say the pattern calls for 800 yards of cotton, and I use shine worsted from knitpicks, which is 2.49 a ball for 75 yards
11 balls X 2.49 each = 27.39
800 yards X 2 cents a yard = 16.22
Yarn (27.39) = labor (16.22) = 43.61, which I would round up to 44 dollars.
If the pattern was all lacy and cabley and intricate and a PITA, I would charge 4 cents a yard for labor, making the total cost 60 dollars. Soooooo a lace shawl that uses 3 hanks of knitpicks shimmer at 4.99 for 440 yards a ball, would be 14.97 (yarn) + 52.80 (labor) = 57.77 rounded up to 58.
Of course, 1300 yards of lace weight yarn probablly should be charged 10 cents a yard, IMHO.
I got this formula from our wonderful mod ekgheiy!!!! She had a worksheet/spreadhseet made up that she uses/used... you might want to ask her for more information.