I knit because it's a hobby to me. For that reason, I do not sell my knits via Etsy. But, for my business because I no longer work outside the home I devote about 6 hors a day to it. I break it up, so I'll spend 2 hours in the morning after breakfast on it, and then do my housework & garden and I'll come back after dinner and work on my business for an hour or two. Then, in the evening before bed I'll work for two-three hours, too. I love doing what I do, so it's not really work (unlike housework!!!)
For your knitting projects, you would probably want to figure out how long it takes you to make a particular pattern & price accordingly. Also, you might want to investigate if their are any timesaving knitting methods (such as speed knitting) that you can work on mastering. Peronally, I can only knit one way (I've tried Stephanie's Speed Knitting, but i can't get the hang of it) but a good part of that is the arthritus and muscular myopathy in my hands :)
Here's the link for speed knitting:
http://www.youtube.com/watch?v=P51GByV0H2w