We have several kids in our life that we like to buy birthday presents for, but I try to limit how much I spend.
Kids are easy to shop for. Often I find myself stressing about them, but they always work out better than I think they will.
Tip 1: If you find a great deal on something stock up. For example, Costco had a hotwheels custom motors set that started out at $39.99. They kept dropping the price until it finally reached $9.97. (Hint: Anytime you see a price ending in .97 at costco it is a clearance deal). When it hit this I bought 3 of them for birthday parties of little boys.
I don't spend more than $10 on birthday presents even for nephews and nieces. Just a rule I go by.
Tip 2: The dollar store can have some fun things. One year my sister gave one of my boys 2 "laser guns" from the dollar store. They have so far lasted 2 years, and the lights still light up, and they are still played with every week. You don't have to spend a lot for it to be enjoyed.
Tip 3: If you are handy with sewing or drawing or any other art form you can make something for the child. I have made several dresses, tutus, etc for birthday presents. These can be more meaningful and can be very cost effective.