We almost always start by looking around the house for stuff to use. DH is in construction, so last year, my oldest used his toolbelt, a pair of old holey jeans, a flanel shirt (found at a garage sale for 10 cents), a pair of boots and a bob the builder hard hat he had. It was really cute, especially with the "oversized" toolbelt.
For my youngests first Halloween (he was still in a stroller, and not walking), I made him a chili pepper costume. I had left over felt (red & green) which is what gave me the idea. I made a body suit, with a pointed end at the feet (which kept him warm too), and almost like overalls at the top with a slit down the back to get him into it. Put a red long sleeve shirt underneath, and made a green pointed color and green hat with a green tube sticking up (made of felt and fiberfilled). It was one of the cutest costumes I had ever seen!
Robots are always good costumes. Did this when I was a kid. Took a cardboard box cut arm & leg holes, and flexible tubing for arms and legs, spray painted it silver and added buttons and switches with paint on the body.
The frazzled housewife is always a good one for girls. Fluffy bathrobe with fluffy slippers, hair curlers or shower cap is always fun...and you can't forget the mug of "coffee" to carry around.
Fireman is always an easy homemade costume too. Spray paint a hard hat red, get a black/blue jacket and pants and add reflective tape and a cardboard badge.
I haven't even asked the kids what they want to be this year. I suppose I should start, in case there is sewing involved!

I love making their costumes, it is so much more fun...Then they don't look like 12 other kids in their class!