I needed a couple of thank-you gifts for some people recently, so I spent one afternoon embellishing some handtowels up for Christmas. I thought they would be a nice, but practical and usable gift.
I bought the towels at Costco (they have a 12 pack for $16--and they are the thicker, high-quality towels.) I paired the towels with some of the foaming hand soaps from Bath and Body Works (that were on sale for $2), tied them both up with a ribbon and passed them out.
For the towels, all I did was measure the band at the bottom, ironed under the fabric edges to match, stuck some ric rac in there and sewed around the perimeter. On some of them I did add some holly leaves and button, but others I just left plain.
The total cost per gift was around $4 dollars and hopefully they will get used often.
P.S. Do you have any good ideas for neighbor/teacher gifts that are under $5? Please share....we all need new ideas. (Especially me!!!)