Speak to the Merchant again to learn how to dye items. (Right-click them to begin the conversation).
Greetings! I don't suppose you'd like to add some color to your life? Oh sure, there are many different colors of dye that I can sell you that you can use to change your armor's color. Let me explain dyes a bit further and then I will give you some complimentary dye to try out for yourself.
Continue speaking with Liliana the Dye Merchant.
Liliana says, "Dyeing your armor can be simple and easy! Simply remove the piece of armor from your person and place it into your inventory. From there, simply click and drag the dye onto the piece you want to dye, and click again. [Simple], isn't it?"
Speak with her once again to finish.
I hope I was able to help you, friend. If you want more dye in the future just come see me or another Dye Merchant.