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I'd say that I use a good, sharp pencil to mark out the vast majority of the time. I go through a lot of them in my shop.
I recommend buying a pack of them and get it over with. It's much cheaper that way and there are no trips out of the wood shop during the day for things you ran out of and need....
There are those times, when you just don't trust a pencil mark because you need your cut to be more accurate than normal. That's when you break out your marking knife.
You see, there's ambiguity in that little dark line. There isnt with a clean crisp cut.
A marking knife will give you a line you can rest a chisel blade in or gently move your table saw up to a few thousandths of an inch at a time.
Let's say, you're marking out for a butterfly (AKA bow tie) key. that's a good time to use a knife over a pencil.
Rest your bow tie key in place and very carefully, run your knife perfectly around the perimeter.
Use a router or chisel to cut out the material, cut to within a 32nd of an inch of the line and use a razor sharp chisel to finish the job.
Here, because you used a knife, you have a starting position for your chisel before you make each edge cut. as long as you drive down with a slight under cut (advisable) your key should fit perfectly.
In this example, if you used a pencil, Your accuracy would be harder (not impossible) to achieve.
I have a double edged marking knife because even if you're not ambidextrous, sometimes you find yourself using both sides.
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That's how we keep the lights on around here... Sometimes...