Sometimes you see a pattern that you just love—the motifs, the fit, some ineffable something that makes you long to knit it—but you have enough sense to realize that the colors would make you look like, let's be blunt: crap. How do you go about reworking the colors to make them right for you?
Let me walk you through the steps involved as I re-color a design. A customer asked if the colors of my Faded Splendor Tam would work in Anne Featonby's Hibiscus Cardigan.
PLEASE READ THIS NOTE BEFORE GOING ANY FURTHER: Anne Featonby's design is lovely just as it is written. The original colors were well chosen and there is absolutely nothing wrong with them! The customer, however, does not look good in them but liked the overall design and felt that this pattern was within her technical abilities. Re-coloring this pattern, or any pattern, is in no way a slap at the designer! And most certainly the process of re-coloring results in added respect for the designer: the most challenging part of designing Fair Isle garments is color choice and movement.
ALSO PLEASE NOTE: I do not normally re-color designs for customers! I only did this one because I wanted to document the process. If you want me to re-color something, I will charge, like, $500 because it is a time-consuming process. As you will see if you read further!
So, follow along with me:
1. OK, first it's about value. Then it's about color.
Value is how dark or light a color appears.
Your first step is to evaluate the pattern carefully in terms of value and sequencing (the movement of values), asking yourself: what am I looking at? Here is the pattern:

Hibiscus Cardigan by Anne Featonby
A. The first element that catches my eye is the bright green line that appears in the center of the two flower motifs and at the edges of the swirly bands. There's not much of this color but it packs a punch. This isn't exactly a function of value but of saturation, but I need to pay attention to this.
B. There's a darker band and a lighter band. The lighter band is actually made up of two smaller, medium value swirly designs bracketing a lighter, wider center band with flower motifs—they look like one really wide band because there's not a huge value difference between them and they flow together indistinctly.
C. OK, so how are the values sequenced within each band?
In the dark band, the motif is darker than the background. The motif shades from medium-dark to very light in the center. The background is very dark and doesn't shade at all except for the center round (the same bright color that caught my eye in A). At the outer edges of the motif it's hard to tell pattern from background.
The center band of the light bands has an unshading medium-light background except for the very center round, which is bright (that same eye-catching color again). The motif moves from being lighter than the background at the outer edges to being much darker than the background in the middle. The center, however, is very light and somewhat bright. Again, at the outer edges of the motif it's hard to tell pattern from background.
The bracketing medium-value bands are sort of indistinct because the both the motif and the background have medium values; the motif is also slender and asymmetrical, which makes it harder to see. I get the impression of color but the motif doesn't stand out.
This is the time to ask an important question: do I like the value contrasts that the designer used or do I want to alter them? Some people like a more muted, less contrasty look, while others love high contrast. This is a very individual response, so you should pause to consider your comfort level.
2. Now that I've analyzed the values and sequences it's time to look at colors.

A. Take a look at how the colors in the original design work. In this case the designer chose orange-red for the two main motifs; analogous golden yellow, yellow, chartreuse for the backgrounds (remember that when you add black to yellows, you get olive colors); and a bright yellow-green and blue-red for the brights.
I also need to know how many colors the designer used: in this case, 9 colors.
This gives me some clues for recoloring; if I wanted to, I could choose a single color family for the flower motifs and an analogous grouping for the backgrounds. Good to know, although it's not necessary to follow the designer's lead in this regard.
B. Now it's time to begin deciding on new colors. In this example, I am starting from colors used in a different pattern (the Faded Splendor Tam pattern, which is available in the Winter 2011 ColorKnits eMag available for PC, Mac, and iPad via iTunes). The Faded Splendor Tam has only 8 colors, 1 short of the number needed for the Hibiscus design.

Side note: It is not necessarily easier to start from an established colorway. It can make a good guide, but it can also force you into some design dead ends.
I pulled yarns in the original Faded Splendor colors, but some of them wouldn't work in the Hibiscus Cardigan design because they were too dark or too light. In the end I kept 4 of the 8 Faded Splendor colors; I pretty much lost the grayed blue-green that I love so much and Sage disappeared altogether. I tried to find other colors in the same color families to replace these rejected colors.
I also had to pay attention to the two bright colors in the original and how they fit into their surroundings; this can be tricky because there aren't a lot of choices among the bright colors, but in this case I didn't have any trouble.
In the end, this is what I came up with—lined up with the original Hibiscus Cardigan colors:

As I said way back in step one, value is the most important consideration. See how I tried to match the values? Here is the same photo in black and white:

It's not always possible to get this exactly right. You can see that the third color from the left is darker in the original (top row) than in the new colorway (bottom row). Although Spindrift comes in 210 colors, I couldn't find one in a hue that worked with my sequence (if this language sounds like something foreign, I wrote about these concepts in my article on using color in Fair Isle in the Winter 2011 ColorKnits eMag). When we re-color a design we will have to make some compromises.
My biggest challenge was the color for the background of the medium-value band with the swirly design. I was moving sequentially from a deep deep plum to a light blue-green. I couldn't find anything that would work against the dark, bright fuschia but I was committed to that fuschia because it was the only bright that would work in the other motif (it can feel like a real game of pick up sticks: each move affects every other color choice). Here's where designing from scratch can be easier than re-coloring—I might have changed the motif to something heavier to provide more contrast, for example, but I was attempting to replicate Anne's careful work here.
3. The final step is swatching. Just because you know the patterning works and that you've done a good job of replicating values doesn't mean the re-colored design will work without testing.

I like it! In fact I like it enough that I'm offering it as a yarn pack, called Rosy Hibiscus, in my shop, Feral Knitter. (You can also get yarn packs for the original colorway.)
There you go: a simple 3-step process that will take you several hours!
Clearly it is easier to do this when you have lots of colors at your disposal—a well-stocked LYS or a personal collection is just about required, but you could work from a color card. (Here's a plug for the mini-skeins I sell at Feral Knitter—I created them for just this type of situation, where you are trying to design something and don't want to purchase full balls just to use a couple of yards to test your ideas.)
Sounds like a lot of trouble! Why bother?
There are many reasons for learning how to re-color a design. Not many published Fair Isle designs are available, so you are not likely to find something that suits you out of the box, so to speak. The shaping of the one in colors that flatter you might be wrong, or the shaping of one that is just right has colors that don't suit. And sometimes the last thing you want to do is design something from scratch!
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