Step 1: Choose the song in your library you want to turn in a ringtone, and select get info.
Step 2: Set the start time and stop time to match the section of the song you want to use as your ringtone.
Step 3: Convert selection to AAC.
Step 4. Drag the AAC version to your desktop.
Step 5: Get info, convert extension to .m4r
Step 6: Drag back into iTunes, and BAM! Custom ringtone, made for free.