So what does my family do for losing teeth? You know we don't really do Santa or Easter Bunny so why would we do tooth fairy. If you chose to do them that's great but my husband and I decided we truly did not want to confuse our children by allowing them to believe in something that is not real then find out its not real and then contemplate if God is real. It can be a slippery slope and this is the path we chose as parents.
We still do fun stuff. My kids still get fun stuff in their stockings at Christmas, they get to do Easter egg hunts and have an Easter basket, and for the tooth fairy, she still puts her tooth under her pillow and wakes up to something special. We just get to take credit rather then a made up character. Again, if you still do it, great, but my husband and I really felt like we didn't need to do it. Honestly, with my kids around a lot of teens they have heard it several times that "Santa's not real" etc etc and with young ears my daughter even repeats it and knows.
For my daughters first tooth she got 4 coupons to one to go out to eat, one to go to the candy store down the street, one to stay up past bed time, and the last one for an activity. For her second tooth my husband and I each drew a minion from Despicable Me. We told her we were going to go see the movie at the theater and she is thrilled. (I keep telling her that she will not be this spoiled for each tooth she loses.) I think I got a $1 per tooth so this is a big inflation.