Enable Product Designer
Go to Catalog > Manage Products, choose a product and set "Yes" for the "Enable Product Designer" option if you want to make this product available for custom design on the Frontend.
Screenshot: Enable Product Designer (Admin panel)
Go to Catalog > Manage Products, choose a product, go to the 'Images' tab in the product settings, choose images that will be used by Product Designer and choose a design area in which the customers will be able to add text, cliparts, and images.
Screenshot: Choose Image
Choose the size parameters of the design area in the pop-up window. You can set the width and height in pixels or change the size and shape of the design area manually. You can also move the design area over the image and select the best place for it, in case you do not wish to allow the whole product image to be available for adding design elements.
Screenshot: Design Area
After you have completed configuration of all settings, click "Save Settings" at the bottom of the pop-up window.