1-Think about the characters (Reven's Shires guide to Common Fairy Tale Archetypes)
2-Determine a Location and Time Period for Your Fairy tale to take place in.
3-Read Fairy Tales & Write Down Elements of Interest As you read fairy tales you'll find that there are a lot of elements in any fairy tale which are borrowed from other tales. For example in "Hansel and Gretel" the children trick a witch into thinking they are too skinny to eat by pretending that a chicken bone is their finger. This idea is likely borrowed from Eastern Europe where it is present in a Mari-El and a Saami tale. To write fairy tales I would recommend reading fairy tales from many countries, not just the Grimm's Tales, and as you read search for the following elements which interest you;
- Write down settings and setups that you find interesting. Every story has a beginning, a catalyst which drives all the other action.
- Write down heroes that interest you. What are they like and what is their 'motivation?'
- Write down the motivations of the many characters, and points of emotional interest.
- Write down the villains that interest you.
- Write down supporting characters, how is it they add to the story?
- Write down items, and magical events that intrigue you.
- Write down challenges and goals which intrigue you.
- Write down interesting endings.
- Moral: ah yes the infamous moral point. Is it necessary? Of course not, but it could be helpful to think about it. Of course morals are tricky things in old fairy tales because their morality was different from ours. One of the most important morals in fairy tales was that being clever and deceitful are important skills to have. Other stories are just tales, often we get too caught up on making stories moral, a good joke doesn't need a moral it just needs to be funny just as a good fairy tale just needs to be fun in some way.
4-Put together the plot
Vladimir Propp, one of the greatest folklorests of all time came up with a list of functions which are often present in fairy tales. These functions can help you write your fairy tales plot structure. Keep in mind that; Only some of these plot functions occur in any one story. The functions which do occur, tend to occur in order of the number provided.
8-VILLAINY or LACK: Villain causes harm/injury to family member (by abduction, theft of magical agent, spoiling crops, plunders in other forms, causes a disappearance, expels someone, casts spell on someone, substitutes child, commits murder, imprisons/detains someone, threatens forced marriage, provides nightly torments); Alternatively, a member of family lacks something or desires something (magical potion, food, a job, a happier life, etc.). This is the 8th function of Propp's list, but I put it first because it is very often the lack of something, a desire for something which drives fairy tales. In Hansel and Gretel for example it was a lack of food which forced the children to leave home, it was also the desire for food that lured the children to the witch, and the witches desire to eat the children that caused the final conflict. So desire, desperation, and or lack of something tend to drive most of the events which occur in fairy tales. Fairy tales tend to be short, often they are the original pieces of flash fiction, so it's important that you begin by explaining something people would quickly have an emotional reaction too, or which helps explain the rest of the story. A lack of common sense for example explains stories about fools, the lack of a happy family, the desire for food, fear of death, etc., drive many fairy tales. Ultimately your story will most often be defined by what your hero wants.
1-ABSENTATION: A member of the family leaves the security of the home environment. This may be the hero or some other member of the family that the hero will later need to rescue. This division of the cohesive family injects initial tension into the story line. The hero may also be introduced here, often being shown as an ordinary person. Leaving home was fraught with hardship during the era of Once Upon a Time. Remember that despite the fact that women had a lot more children the population didn't grow very fast, because most of these children would die. The challenge of surviving meant that parents couldn't afford to keep their children after a certain point, how soon this happened depended. For some children (Hansel and Gretel) it occurred when they were still very young, but for most fairy tale heroes this occurs quite a bit later. Even for adults, however, leaving home could be a scary prospect. Every year hundreds of people starved to death in London and along country roads. There are a number of fairy tales where the protagonist sits down and begins to weep, or lays down ready to starve to death. Bandits were also excessively cruel at this time, there are records of them cutting off people's hands for no other reason than to laugh at their suffering and pain.
2-INTERDICTION: An interdiction is addressed to the hero ('don't go there', 'don't do this'). The hero is warned against some action (given an 'interdiction'). Heroes are given warnings that they typically violate. The advantage to an interdiction is that it tells the audience a little bit of what's going to happen in the story, so it's a way to set the stage, like putting clues into a mystery.
3-VIOLATION of INTERDICTION. The interdiction is violated (villain enters the tale). This generally proves to be a bad move and the villain enters the story, although not necessarily confronting the hero. Perhaps they are just a lurking presence or perhaps they attack the family whilst the hero is away.
4-RECONNAISSANCE: The villain makes an attempt at reconnaissance (either villain tries to find the children/jewels etc.; or intended victim questions the villain). The villain (often in disguise) makes an active attempt at seeking information, for example searching for something valuable or trying to actively capture someone. They may speak with a member of the family who innocently divulges information. They may also seek to meet the hero, perhaps knowing already the hero is special in some way.
5-DELIVERY: The villain's seeking now pays off and he or she now acquires some form of information, often about the hero or victim. Other information can be gained, for example about a map a or treasures location.
6-TRICKERY: The villain attempts to deceive the victim to take possession of victim or victim's belongings (trickery; villain disguised, tries to win confidence of victim). The villain now presses further, often using the information gained in seeking to deceive the hero or victim in some way, perhaps appearing in disguise. This may include capture of the victim, getting the hero to give the villain something or persuading them that the villain is actually a friend and thereby gaining collaboration.
7-COMPLICITY: Victim taken in by deception, unwittingly helps the enemy. The trickery of the villain works and the hero or victim naively acts in a way that helps the villain. This may range from providing the villain with something (perhaps a map or magical weapon), to actively working against good people (perhaps the villain has persuaded the hero that these other people are actually bad).
9-MEDIATION: Misfortune or lack is made known, (hero is dispatched, hears call for help etc./ alternative is that victimized hero is sent away, freed from imprisonment). The hero now discovers the act of villainy or lack, perhaps finding their family or community devastated or caught up in a state of anguish and woe.
10-BEGINNING COUNTER-ACTION: Seeker agrees to, or decides upon counter-action. The hero now decides to act in a way that will resolve the lack, for example finding a needed magical item, rescuing those who are captured or otherwise defeating the villain. This is a defining moment for the hero as this is the decision that sets the course of future actions and by which a previously ordinary person takes on the mantle of heroism.
11-DEPARTURE: Hero leaves home;
12-FIRST FUNCTION OF THE DONOR: Hero is tested, interrogated, attacked etc., preparing the way for his/her receiving magical agent or helper (donor);
13-HERO'S REACTION: Hero reacts to actions of future donor (withstands/fails the test, frees captive, reconciles disputants, performs service, uses adversary's powers against him);
14-RECEIPT OF A MAGICAL AGENT: Hero acquires use of a magical agent (directly transferred, located, purchased, prepared, spontaneously appears, eaten/drunk, help offered by other characters);
15 GUIDANCE: Hero is transferred, delivered or led to whereabouts of an object of the search;
16-STRUGGLE: Hero and villain join in direct combat;
17-BRANDING: Hero is branded (wounded/marked, receives ring or scarf);
18-VICTORY: Villain is defeated (killed in combat, defeated in contest, killed while asleep, banished);
19-LIQUIDATION: Initial misfortune or lack is resolved (object of search distributed, spell broken, slain person revived, captive freed);
20-RETURN: Hero returns;
21-PURSUIT: Hero is pursued (pursuer tries to kill, eat, undermine the hero);
22-RESCUE: Hero is rescued from pursuit (obstacles delay pursuer, hero hides or is hidden, hero transforms recognizably, hero saved from attempt on his/her life);
23-UNRECOGNIZED ARRIVAL: Hero unrecognized, arrives home or in another country;
24-UNFOUNDED CLAIMS: False hero presents unfounded claims;
25-DIFFICULT TASK: Difficult task proposed to the hero (trial by ordeal, riddles, test of strength/endurance, other tasks);
26-SOLUTION: Task is resolved;
27-RECOGNITION: Hero is recognized (by mark, brand, or thing given to him/her);
28-EXPOSURE: False hero or villain is exposed;
29-TRANSFIGURATION: Hero is given a new appearance (is made whole, handsome, new garments etc.);
30-PUNISHMENT: Villain is punished;
31-WEDDING: Hero marries and ascends the throne (is rewarded/promoted).
A few more points to keep in mind
There is often more than one villain in tales. Hungarian tales for example, would commonly have a dragon that the hero had to defeat and a false hero who took credit for the heroes hard work.
Many fairy tales seem to have two beginnings. In "The Four Skillful Brothers" for example, the brothers are starving so they set out to get jobs. Eventually they complete this task and are able to return home. However, with their first problem resolved a new problem arises when a dragon attacks the kingdom.