This worked for me in an older version of iTunes...
1) In Mac iTunes, find your song then right-click on the song and select "Create AAC Version"
2) In iTunes find and right click on that AAC version and select “Get Info”. Choose “Options” tab. Set start and stop time of the part of the song you want to be your ringtone.
3) Right-click on the song that you have just edited, and then click “Create AAC Version”.
4) Right-click the short AAC song you just made with a short time associated and “Show in Finder”
5) go back to iTunes and delete the song in iTunes–making sure that you click “Keep File”. Do not move to Trash
6) In the Finder window you opened in 4), change the file ending from .m4a to .m4r. Click Use m4r if you get a warning.
7) Drag that renamed file into iTunes and it should show in your ringtones.
After reading this you can probably understand that most people just buy their ringtones to avoid all the time and trouble!