So, you want the sandpaper letters, but can't bring yourself to purchase them retail from one of the fine Montessori Suppliers. You do have some less expensive options!
First, if you are feeling crafty, make them yourself! I made my first set myself using flat wooden tablets bought in bulk at a craft store (only a few dollars), and some textured paint sampler cards in blue and red from my nearest hardware store. I traced the letters on the back of the paint sampler cards with graphite paper, and used an exacto knife to cut them out. (This part would be even easier if you had access to an Ellison machine or something similar to punch out the letters). Then, I simply glued on the letters to the wooden tablets! For the numbers, I purchased black, raised mailbox numbers from the hardware section of Walmart. The best part about these are that they are already textured, have strong self-adhesive on the back of the numbers (made to last through weather conditions), and all I had to do was peel and stick! The children really like these because the numbers are 3-dimensional and easy to finger-trace.
Another option is to purchase handmade sandpaper letters/numbers. Polliwog Learning Products sells sets of their letters and numbers beginning at $9.99. The photo above is from their sandpaper numbers.
A third choice is to visit Lakeshore Learning's nearest store or their website for this set. Although I haven't ordered these myself, I've always been happy with their quality and customer service, which is important to me. Plus, these are only $14.95! The number set is also available.
Montessori Services offers a book version of the tactile letter concept in the Red Letter Alphabet Book. Although they recommend using this book as a complement to the sandpaper letters, it does use the same concept, with velvety, touch-sensitive letters, and has paired them with pictures of everyday objects. Priced at $20, or buy it as a set with the number book for $30.
One other book selection, which I have, is called Making Letters, a very first writing book. Currently available at Amazon for $7.99, it is a great introduction to tactile letter tracing. The book is a board book with the letters indented into the page, creating a cut-out surface for finger tracing. There are large dots to show the child where they begin tracing, and they follow the dotted path around the letters. Next to each letter is an object that begins with that letter and the name of the object. This book is all lower case, which I find refreshing, as so many of the alphabet books on the market show only upper case letters. You can buy it as a set with the coordinating Making Numbers and Making Shapes tactile books for $23.97. I also like the book concept because unlike the sandpaper tablets, they travel well in the car, a waiting room, or at the table in the restaurant.
If you already have the sandpaper letters, and want an extension, take a look at the Magnetic Trace a Letters by Anatex. Yes, they are expensive ($87.32), but they look like such fun! Plus, the child will gain practice in holding the magnetic wand like a pencil while they trace, making the transition to pencil and paper gentler. These are on my wish list!