I am about to start offering co-ops for my dyed yarns. I have really struggled with what kind of a discount to offer for them. I'm going to try just a small one first and then assess how I feel about the amount of work vs. the reduced profit. There should be some savings in time and increased efficiency; we'll see if they're enough to offset the decrease in money.
I'm also meeting with a local yarn store next week to talk about retailing my yarns locally. I'm really excited about this--it feels like a good step to be taking.