Almost always, the best way to cut a cigar is quickly and decisively - but before we get into how, let's talk about "where"?
The proper place to cut depends on the cigar. First, you need to closely examine the head of the cigar. You are looking to see just how far the cap (this is the round of tobacco used to seal the head) extends down the barrel. On a parejo (a parallel-sided cigar), this is typically 1/4"-3/8"; wherever the caps stops you should regard as your limit as to how far down you should cut.
The best cut is one above this "cap line," which will open up 75%-85% of the cigar's surface. You want as large an open cut as possible to allow for an easy draw, but you do not want to cut beneath the cap line, as the cigar may start to unravel. Sometimes this means a thin cut of 1/32" is perfect, while other times you may need to cut 3/8" - it depends entirely on each cigar's construction.
For figurados such as torpedos, perfectos, etc., you may have to cut significantly more in order to open the head enough for a sufficient draw. Exactly how far is a personal matter. Typically, people smoke cigars with tapered heads because they like how the narrowing ring concentrates the smoke against the palate, so unlike with a parejo, most figurado smokers want less of the cigar's surface opened by the cut. And because of their shape, figurados seldom unravel, even when cut beneath the cap line, so it really is a judgment call. Personally, I suggest you cut less at first, smoke the cigar for awhile and, if you decide you wish for a more open draw, just recut.
As I said before, the key to a good cut is to be quick and decisive. Once you find your spot, you should not hesitate - just clip it. Quicker cuts tend to be cleaner cuts, however, you must have the right tool to do this well. The prime criterion of any cutter is that it be sharp - the sharper the better.
Most single-bladed guillotine cutters are inadequate, so I suggest you opt for a double-bladed guillotine if possible. Typically, double-bladed cutters work better, as the two opposing blades work together. However, there are exceptions to this rule. There are some single-bladed cutters that are great, and some double-bladed ones that are just plain junk. Single or double, what is important is that the cutter be sharp; if it isn't, you will just end up crushing the head of your cigar.
There are a quite a few other tools you can use to cut a cigar.
One that is frequently seen at cigar store counters and in the movies is a pair of cigar scissors. Personally, I would steer clear of these; they look cool, but most of them just plain stink. They are seldom sharp enough and it is very common for the smoker to torque the scissor blades while trying to cut a cigar, resulting in ruined smoke. If you do decide to buy a pair of scissors, buy the best you can afford. And be sure to practice a bit on some very cheap cigars before attempting to use them on a premium cigar.
Another option is a punch cutter. These are very easy to use, as they simply punch a hole of a fixed diameter into the head of the cigar. All you need to do is line up the cutter dead center, and twist. Punch cutters can provide a very clean cut; their only real drawback is that most do not cut a large enough hole for 50+ ring cigars - but this may not be an issue for you.
A unique cut is a "v-cut," which requires the use of a specialized v-cutter. This tool cuts a wedge-shaped notch in the head of your cigar. Another unique, but similar, cut is the "cat's eye." While the edge of the v-cut is straight, a cat's eye- cut is curved like a pointed ellipse. Both of these cuts tend to concentrate the smoke on the center of the palate - some folks swear by these cuts while others hate them. Both styles of cutters need to be extra-super-sharp to work well.
A sharp penknife can also do an excellent job but, unlike with a cutter, you must slowly and meticulously cut a full 360-degree circle along the head of the cigar. Once done, you can remove the cigar's cap just as you would lift the toupee off a bald guy's noggin.
This very same technique can be applied by using your thumbnail (or teeth) to gently pierce through the wrapper, in a circle, to separate the cap from the cigar. Although a cigar snob would snicker at this practice, this is the most common cutting method used by those who actually farm the leaf and make the cigars. With a little practice, you can become quite deft at doing this quickly and cleanly.
And, if you managed to read all of this, here are a couple of quick, neat cutting tricks:
If you lay a guillotine cutter down flat on a table, then insert the head of your cigar so that it rests against the table's surface, then clip, you will almost always take off the right amount on almost all cigars.
If all you have is one of those cheap giveaway cutters, try cutting your cigar while it is still in its cellophane sleeve. This technique will produce a much cleaner cut, with a dull cutter. Don't do this with a sharp cutter though; the cellophane will actually inhibit a clean cut.
We hope this primer on cigar cutting provides you with some insight and ideas but, in the end, how you choose to cut your cigar is a matter of personal choice. Whatever method works best for you is the best method.