Here is a little photo essay. I had a ball of the merino/bamboo blend sock yarn in cream that I wanted to dye and knit up for a teacher gift. I used a sprinkle dye method with dry Kool-Aid and bottles of food coloring. You need a bit of acid provided by vinegar and heat provided by microwaving during the process to set the colors. Since the dyes are food, they are safe in your everyday pans.
Skein up the yarn and tie around it in different places to keep the tangling down.
Soak the skein in warm water for a while in a microwave safe dish.
Pour off most of the water and add a glug of vinegar. Swish it around.
Start with the lighter colors and sprinkle them on dry (Kool-Aid) or drip them (food color).
Let the colors saturate the skein for a while move it gently around to expose undyed areas and add more sprinkles. Microwave in bursts of 1-2 minutes between colors.
After coloring to your satisfaction (be careful not to overdo it the first time). Give it a final trip on the microwave carousel to fully set all the dyes for another 1-2 minutes.
Let cool a bit, then rinse fully in lukewarm water.
Twist it up and keep or sell.
Wind it into a ball when you are ready to use it.