Hi Kayla
I totally agree with the other sellers. Definitely raise your prices; it needs to be something you can earn a living off one day; your time is very valuable (I cant knit anything, never mind a hat!) so I would say £15 - £20 for a one of a kind handmade piece is more like it :)
I would certainly separate the listings - more things in your shop means more chances of people finding you and a better chance of being found through seo. The photo doesn't show off your work very clearly which makes it hard for the buyer to see. Photo each one individually, and try to use all the photos you can for each listing (Etsy allows 5). Shoot on a white background using daylight and do shots that show the whole thing as well as some nice detail shots; you need to sell the item with your photography as the buyer cant touch it.
Finally, I would say that if you're wanting to do custom listings as well as selling those hats, create a separate listing with clear text for the main image. It could be text only saying "Custom Knitted Hat" for example. Then when a customer is searching hats on etsy, they'll know you can make one to order :)
Finally, if you can post internationally you open up your market to much more buyers - always a great thing :D
I hope that helps!
Good luck with your shop