I use a PrismCut cutter with "Sure Cuts A Lot 4 Pro" software, which comes with the cutter. The whole thing was pricy, I spent close to $500. But I love it. I think if you are trying to save money, this cutter is
NOT the way to go. The reason I got it, and the reason that I am so happy with it is that I am now free to design anything I want, as long as it is not way too tiny.
Look at the attached 1/48 Ki-100. All the "meatballs", as well as the three yellow Japanese characters near the wing trailing edge were done with stencils from the cutter, and I love how they came out. They look painted on --which they are! But the multiple tiny red circular or oblong signs with white lettering would be impossible to do with stencils. You also would not be able to do, for example, the tiny coat-of-arms that Italian fighters have at the center of the white cross on the tail. Or super-tiny numbers. For things like that, you will still need decals, or (as in my Ki-100) a tiny brush that pretends that there is actual white lettering there (instead of gibberish!).
I use Adobe Illustrator to make the designs. (This is an expensive program that I could not afford if it weren't that I get it for free because the university from which I retired makes it available to its retirees. But Illustrator is an overkill for what we are doing here; I am sure that there are other (much cheaper!) programs that would do the job equally well.) I can take a digital image from any publication, import it into Illustrator, trace any lettering (or whatever else I want) with a mouse cursor. That produces an Adobe Illustrator file, which I can then drag into the "Sure Cuts A Lot 4 Pro" software. Then I run the cutter with this software, and it makes the stencil.
As someone else has mentioned here, when using stencils the paint always tends to get pulled in under the stencil, by capillarity. I have learned the hard way that the best way to avoid this is to press ever-so-gently on the airbrush,
not letting the paint pool at all. One brief pass, wait a few seconds for the paint to dry, another brief pass, etc.
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I can't remember right now, but I think I had to buy this particular cutter because I am on a Mac, and I was told that some of the other cutters would not work well with a Mac.
Another example: In this 1/48 scale C-202, the ultra-tiny black-and-white sign on the tail cone, the coat of arms on the rudder, the Aer. Macchi sign, the MM9042 sign, the cat-and-circle, the blue+grey+white fascia ahead of the cockpit, and the triple fascia on the far wing are all decals. But the white cross, the "151", the red "1", and the white chevron are all stencils. The green irregular donut patches were also made with stencils, they were the hardest part to do, and required a lot of doing-over with stencil and counter-stencil until I was happy enough. The white band around the fuselage was done with simple masking tape, of course.
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