Imitation vanilla is not worth my time to disparage; real vanilla extract is worth the money; the most delicious option is to make your own.
- Obtain one or lots of vanilla beans (grocery / amazon / ebay). Split open the long way.
- Put in a sealable glass container (jam jar or whatnot) and cover with alcohol.
- Put this in a darkish cupboard and wait. Shake daily if you want to speed up the process. Your extract will probably be usable in 1-2 weeks (varies; see note below on proportions of ingredients and speed of extraction).
There's no exact math to this. One vanilla bean + lots of alcohol will turn into vanilla extract very slowly (months) and is not likely to ever be as strong as you want (although vanilla vodka is great for cocktails). A shitload of vanilla beans + just barely enough alcohol to cover them will turn into usable extract very soon (days), and over time will develop into something insanely strong. That's the approach I like to take, but most people are happier somewhere in the middle. There's really no wrong way, as the ratio of one ingredient to the other can always be altered at any point.
It's fully steeped when the color goes from tan to dark brown, and when it smells like vanilla extract. But you can use it before then - just use a tad more.
I only use ultra-cheap vodka for this - use whatever you like, but I've found there's no point in using the good stuff on this.
I've been told rum works great for this; haven't tried it myself though.
Vanilla beans keep forever if stored in a dark cool place. They do tend to dry out over time. When brittle, they're hard to scrape the delicious innards out of. Making extract is a great way to get the flavor out of even the woodiest beans. If they've seriously turned into twigs, just break them into pieces before covering with alcohol.
Similarly, if you have scraped out the seeds from the center of a vanilla bean, you can save the husk and use it to make extract; there's a ton of flavor still in there. If said husk has already been steeped in milk (as in making ice cream), you can still use it for this - just rinse it in hot water first, to prevent something disgusting from occurring.
This project is eerily infinite, in that you can keep reusing the same beans over and over. I keep two jars going, one of active, completely steeped extract, and the other one freshly covered with vodka. When one runs dry, the other one is usually ready to go. You can keep leaching flavor out of the same beans a truly insane number of times. There will come a point when you'll just know a bean is dead - it will be limp and brown instead of black. At that point, toss it.
Even though vanilla beans are hellishly expensive (for good reason though), if you do this once from scratch, you've pretty much broken even on what you would have spent on a bottle of store-bought. Do it twice, and it's free (except the 3 cents' worth of cheap vodka).