The average cost of a bottle of pure vanilla in my local grocery store is 10.00 for a 4 ounce bottle. That is equal to $2.50 per ounce. That is pretty pricey so I have always used imitation vanilla. There is a big difference in flavor between real vanilla and imitation.
An average bottle of vodka is $9.00. I started with 8 vanilla beans in the vodka which cost me $12.00. Beginning total = $21.00 A bottle of vodka is approximately 25 ounces. For an average of .84 per ounce. Not bad at all.
The process is very simple. Carefully slit the vanilla beans down the side and drop into the bottle of vodka. Allow the bottle to sit for a couple months before beginning to use. As you use the vanilla from the bottle occasionally add some more vodka and a fresh vanilla bean.
It is also important to watch the for the strength of the alcohol in the vodka. A bottle of vanilla extract is 35% alc/vol. The first bottle of vodka I bought was also 35% alc/vol. Just today when I was tweaking my bottle of homemade vanilla extract I noticed that my new bottle is 40% alc/vol. Hmmmmm, hopefully my kiddos won't get a bit tipsy from their oatmeal cookies.
I have also found that vanilla beans can be quite expensive. If you have to pay a small fortune for the beans it totally defeats the purpose of making homemade vanilla. I have found the best price for vanilla beans at Cost Plus World Market. They come two in the little sealed pouch, making them only $1.50 per vanilla bean.