Fineness
Wool fiber is measured in microns, and finer is softer. Ordinary wool runs 25 to 35 microns; merino 18 to 24; extrafine and ultrafine merino under 19; cashmere 14 to 16; baby alpaca about 22. The number is the single biggest reason one 100% wool costs more than another, because fine fleece is scarcer and softer against the neck. Mills that pay for it usually say so — "extrafine", "ultrafine", "18.5 micron" on the band — and the ones that do not usually have a reason. Juniper Moon Rambouillet and Zitron Feinheit are extrafine merinos; Artyarns Cashmere 1 is cashmere at the top of the scale; Brown Sheep Lamb's Pride is a 23–25 micron wool, honest about it, and priced accordingly.
Staple length
How long the individual fibers are. Long fibers spin into a smooth, strong yarn that pills less; short fibers make a softer, loftier yarn that sheds and pills more. Cashmere is short and soft; longwools like Wensleydale and Bluefaced Leicester are long and lustrous; merino sits between. A yarn that is both fine and long-stapled is the expensive one, which is why a good merino can outlast a cheap cashmere.
Spinning and plying
The same fiber can be spun well or badly. An even, consistent twist along the whole skein, plies that are balanced so the yarn does not twist on itself, and no thin spots or knots are what you pay a good mill for, and the difference shows as a fabric with even stitches and no surprises mid-row. Worsted-spun yarn (combed fibers, all parallel) is smooth, dense and durable; woolen-spun (carded, fibers every way) is lofty, warm and lighter per yard. Neither is better; a mill that knows which it is making and says so is. Italian and Peruvian mills built their names on the spinning as much as the fiber.
Dye
Consistency from skein to skein and lot to lot, colorfastness, and whether the dye house takes the fiber's softness with it. Hand-dyed yarns cost more because the dyeing is labor; kettle-dyed depth like Malabrigo's cannot be done by machine. A cheap yarn that bleeds in the first wash was dyed cheaply, and you find out on the finished sweater.
Sourcing
Where the fleece came from and how the animals were kept. Mulesing-free merino, certified organic cotton and wool, traceable farms, and fair wages at the mill all cost money and are increasingly what "premium" means. Zitron says the farm; Blue Sky's organic cottons are certified; the organic and eco-friendly shelves are the lines whose mills put it on the band.
What it is not
A brand name, a pretty label, a word like "luxury" on the band, or a price alone. The way to check is on the needles: swatch, wash the swatch, rub it against itself, and look. Even stitches, no pilling after a rub, softness that survives the wash and color that does not run are what premium feels like; anything else is marketing. The gauge swatch guide is the method.
When cheap is the better buy
A felted bag does not need extrafine merino; a colorwork sweater wants a plain, grippy wool, and Nature Spun at its price is the right yarn, not a compromise; a child's sweater that will be outgrown in a year wants a washable blend like HiKoo Simplicity; a first project wants something you will not mind ripping out. Being inexpensive is no strike against a yarn, and several of the best on our shelves cost very little. What we will not stock is a yarn that costs more only because of the label — how we choose what we stock is the longer version, and the buying guide says what to check on a page before paying for any of it.