We do a lot of handmade gifts and I work hard to keep the cost down per git to $5 or less. Some of the things we do are:

Ornaments, scarves, bath salts, candies, personalized picture frames and for people who live close by we’ll do coupon books with things like: a meal brought to you, babysitting, etc.

My kids love to get the annual gift certificates:

1 Day no chores
1 Day no schoolwork (we homeschool)
1 Day no chores and no schoolwork

This year my kids are going to make refrigerator magnets out of holy cards and inspirational cards. They are also going to make the annual calendar gift for the grandparents that I usually order from one of the online photo stores. But this year they are going to use snapshots, card stock and craft supplies to do it ourselves.

not sure if it qualifies cost wise, because we usually have most of the materials in the house, but we have made aprons and tote bags (the blank canvas ones they sell at Michaels) with fabric paint and acrylic paint with grandkids handprints to look like flowers, titling it Grandma’s garden. A big hit! Also, if you can get a big ceramic plate at a discount store, kids can put handprints on upside down to make reindeer (think the thumb is the head) or footer ts for snowmen (the heel is the head) and write the date and sentiment around the edge. Older kids can crossstich a wall hanging or pillow face with a family saying. I guess my theme is handmade, but you have to plan and start early!

I have a couple of ideas. For the grandparents and God parents of my children, we make a photo book from the current year.
I also make a photo book for each of my children that includes special people and times we’ve had over the previous year. I usually get one of those inexpensive brag books for about a dollar and then fill them all up. I also take last year’s back from my children to store for them.
For my aging parents, I purchase an inexpesnive calendar ($1-$3) and put the birthdays for all of the children and grandchildren, wives, husbands and more. I print the dates on a sheet by month and glue it on that month.

My children make Christmas ornaments for Grandparents and other family members.  Some years we decorate glass ornaments with painted fingerprint designs such as snowmen or Santa and his reindeer, and other times we make salt dough ornaments which the children paint.  They are always cherished by the recipients.

Your kids could make mugs and other gifts at one of those make your own pottery places.  Those are always good gifts for sentimental people like grandparents, aunts, etc.

One year my teen son (with a little of my help) made a pillowcase for each of his siblings. Find character print material—you don’t need a lot, sometimes even a remnant is enough…straight seams, a hem, and done.

Another son designed note pads for each sibling. He used 8 x 10in paper, divided into fourths. To print 50 sheets, and have it glue-bound with cardboard backing was less than $10, and each had a personalized note pad. We might do the same this year for dad—but as pinochle score pads instead.

Using clip art already on the computer, we designed and printed personalized note-cards for a family friend—she was thrilled.

All I can remember right now (that haven’t already been mentioned above)...if I remember more, I’ll come back.

A couple of years ago I made bath salts using Epsom Salts, a little glycerine and essential oils.  The biggest expense is the essential oils, but once you have them, they last a longggggg time!  I put the bath salts in glass jars that I had saved. You can use mayo jars, peanut butter jars, big, small, etc etc.  I decorated the lids with little doilies I had gotten in the dollar store, and tied a ribbon around the top to hold the doily on.  I even made labels on my computer!  These were a very big hit with the ladies, big and small!  If you are giving these to “little” ladies, you can use plastic jars.

If your family camps book a site a a “fancy” site like Yogi Bear and give each child in the family a brochure as part of their gift… otherwise we couldn’t afford some of the camp sites or tourist visit places or a print out or card of a shrine you can plan to camp near when spring/summer arrive in just a couple months…

A few years ago the kids and I made handmade soaps and bath salts.  They had a blast stirring up the salts with the fragrance and coloring.  And they were thrilled with giving all their friends the animal shaped soaps we made.  We also made some grown up versions for grown up relatives.  For the bath salts, I used canning jars and decorated the lids.  I think it all came out to about $5/gift when it was all said and done but it was years worth of memories in the making. 

Homemade coasters:

Buy small (3” X 3” ?) tiles from a home improvement store.  Let each of the kids paint one.  Spray seal.  Put little cushion pads on the back.  You have a set of coasters to give someone.

We are making homemade vanilla extract this year ~ .35 cents per ounce!

My favorite homemade gift is perpetual vanilla extract.  I purchased vanilla beans & glass bottles online.  You slit 5 or so beans per bottle & fill each bottle with vodka, rum, or brandy.  They need to rest for a few weeks before you can ue the extract, but you just refill the bottle with whatever liquor you started with.  The beans can last up to 5 years.  We have done this for CCD teachers, piano teachers, & more.

One year I created homemade recipe books for the female members of our family (my sister, aunt, mother & mother-in-law). I took our favorite recipes, the ones people request the most and the ones my children love the best and wrote them out on pretty cardstock. I added cute pictures of my children eating or helping to prepare the recipes and slipped the pages into plastic page protectors in a pretty binder. In all I spent less than $5 per gift and the recipients loved them and still tell me how often they use the recipes.

Thanks to other reader for their ideas!! One year knit dish cloths while watching kids games.  I bought some Christmas liquids soaps when they were on sale at local bath store.  I put two or three cloths and bottle of soap in gift bag.  Another year I made home made jelly.  We lived in house that had grape vine! This year I plan to make home made bread with breadmaker I just bought recently at an estate sale for eight dollars! 
Hope this is helpful!

Making candles is fun and easy. You can use gel wax and add color and scents but the fun part is putting collections of stuff in the bottle and pouring the wax over it.  like wax shapes or pinecones and pine bows, be creative!

Another thing we do is make up cinnamon rolls and freeze them before baking in aluminum pans. Then the day we are going to deliver them we make up a big batch of butter cream icing and split it up in plastic containers. We deliver ours to extended family at Christmas Eve at my mom’s so everyone can bake them Christmas day if they want too, or they can put them back in the freezer for later in the week. Some years we have bought hot chocolate, cider, hot tea and/or bagged coffee to go with them too.

how about donations in someone’s name ? they can be as low as $2 http://alternativechristmasmarket.org/

How about regifting, or giving things you already own? We did “no store-bought presents” for Christmas one year, and the gift I remember best was my sister giving me a pair of her slippers that she knew I loved.

My go-to hand-made gifts are things I’ve crocheted. Scarves are easy and only require a basic stitch, so even a beginner could do it!

How about giving your married children a week end away together on their wedding anniversary—-while you take care of the grandchildren?  A WIN WIN situation!!!

Last year I proposed to our extended family that we have a re-gifting Christmas.  They agreed.  So instead of buying new gifts, we each brought gently used or never used items we had around our house that would equal around $25.00.  Females brought a female-friendly gift such as jewelry, scarves, lotions; males brought male-friendly gifts like tools, shirts and hats.  We didn’t put names on them, each person took a gift and was surprised!  It worked out really well and I think we would all opt to do it again.

Well I remember that awhile ago you talked about the Ink and Fairydust magazine, it was free, wasn’t it? A subscription to that or a similar magazine would be great for any older kids and teens.

One year I made book boxes for family. I actually saw a tutorial for one recently, here’s the link: http://bit.ly/nUR5zn  All you need is an Xacto knife and old books, and actually it would be a great project to do with a scroll saw or jig saw. Good project for boys to work on if you use the power tools.