Step 1: Doodle it. In notepads, on sticky notes, napkins, wherever. I must have doodled around two dozen logos before settling on one.

Step 2: Draw it. In my trusty Moleskine, of course. Drawing on grid paper helped get the dimensions down.

Step 3: Draft it. That is, getting the drawing onto the computer in a rough manner. Inkscape is my vector drawing package of choice.

Step 4: Merge it. Union the shapes together. Looks vaguely like a logo now.

Step 5: Tweak it. Fill the shape in and tweak the geometry.

Step 6: Detail it. Add the breaks in the circle, and more importantly, the title text. The logo is pretty much done.

Step 7: Export it. Colour it in, and export the image. Obligatory in-game screenshot: