It is definitely cheaper to make your own clothes than to buy them, if, that is, you sew well enough to want to wear them when finished.
Right now, I am preparing dolls' clothes for a class at the local museum for children who want to sew doll's clothes.
I bought remnants the other day in two charity shops and got nearly 11 yards of material for £3, 59. There is far more material than even 10 children could possibly use, however wasteful they might be, or however many mistakes they make. I estimate that a set of blouse, skirt, underwear and coat for, let's say, Barbie would cost about 50p when we factor in sewing thread, electricity etc.
The cheapest dress I can find online costs over £4.
Another advantage to sewing clothes yourself is that you know precisely what the fabric, thread and fastenings are made of, which is important for people with allergies.