There are 2 ways of looking at this
[B][U]1 - Money[/U][/B]
You are doing this for profit so you have to calculate the cost of all your inputs, calculate a profit margin and there is your price.
5 hours = $25 ( lets say 5$ per hour )
Pattern = $10
Wool = $30
Total = $65
Profit = $6.50 (10%)
Final Price $71.50 ( excluding taxes)
[U][B]2 - Love[/B][/U]
You enjoy knitting and you are happy doing the work, and you see this as an opportunity to subsidise your habbit. Afterall if you arent knitting this you would probably be knitting something else right? So the time is free, since you would be knitting anyway. You would be knitting with some wool, but potentially cheaper wool, so if there is a difference you need to charge for that. Then if there are unavoidable costs like taxes or patterns you would need to include those.
Probably a better solution is get the buyer to buy the pattern and wool, you knit it for free and agree that they get you a gift for your time