Whether you spend 5 hours a week on your bike or 35, a proper fit can make all the difference. Like many aspects of training for cycling, bike fit is a type of quasi-science, with a lot of folk knowledge and old school adages mixed in with attempts at real measurements of performance changes based on certain angles and lengths. A balance between both is in order, since the science tells us what should be the case, while the real world experience tells us how it actually feels. Either way, there are four primary measurements that we'll focus on here: saddle height, saddle setback, handlebar reach, and handlebar drop. There are many, many other important factors like cleat position, q-factor, cant of the foot, saddle width, and so on, but those higher level adjustments are more than we can cover in a single article, and are often best addressed by a professional fitter. By focusing on just these four core measurements, you can make small adjustments on your own based on feel, and allow you to maintain a consistent fit from one bike to the next.
Of course, each measurement affects the other, so it's important to set your position up in a particular order, starting with saddle height. I measure saddle height as a plane from the center of the bottom bracket spindle (using the center of the crankarm bolt) to the lowest (or deepest) part of the top of the saddle. If you look at most saddles, they have a dip or hammock shape, and that deepest part is typically where you'll be sitting when going hard, provided your saddle is properly leveled. (Though I shouldn't take a level saddle for granted, as this is one of the changes I make most often when doing bike fits. To use any saddle properly and have leverage on both the front and back parts of the curve, you should ideally be riding with a level saddle, or very close to it, allowing you to sit "in" your saddle, rather than on it.) By using that deepest part of the saddle as your top point, you'll be able to keep your height consistent between saddles and bikes. Don't simply go straight up the seatpost, since that has no relation to where you'll actually be sitting.
For many years, to determine a 1-2 centimeter range or starting point for ideal saddle height, I used to rely on the "Lemond Factor:" a measurement of the inseam multiplied by .883. I found that this always gave me a low setting from which I could work upwards, though sometimes it's right on the money. It was originally formulated for 170mm crankarms and pedals with toe clips and straps, but with longer crankarms and clipless pedal systems, some of the slack is taken up, and it balances out. These days, I trust my own eyes better than a formula, but if you're attempting to fit yourself at home and from scratch, it's can be a useful place to start.
What I look for after setting the saddle height is for the rider to have a flat forefoot and slightly heel up position at the bottom of the pedal stroke, without over-extending behind the knee or rocking in the saddle to do it. Many coaches rely on a specific upper and lower leg angle of anywhere from 28-35 degrees. I find it just as important to simply watch a rider's pedaling dynamics as well. The key is to be able to apply force all the way down through the pedal stoke, without dropping the heel at the bottom and delaying the time it takes to begin pulling back and up on the pedals on the upstroke. If you're setting your position up for cyclocross or mountain biking, you might be up to a centimeter below your optimal road position to allow for pedaling while hoovering over the saddle on bumpy terrain.
Once you're within a range for saddle height, the next aspect to consider is saddle setback. Your setback is measured as the distance between the vertical planes of the center of your bottom bracket and the nose of your saddle. When doing a bike fit, it's important that the bike is on a level surface. You may need to purchase a spirit level long enough to connect the dots between your front and rear axle to confirm the bike is level. This is especially important when measuring setback, as a tilted bike could put your measurements off by .5 to 1 centimeter.
You'll also need a plumb bob for this, which you can get at any hardware store for a few dollars. Drop the plumb from the nose of your saddle down past your chainstay, and mark the spot the line crosses the chainstay with a Sharpie. Then you can measure directly from the bottom bracket spindle to that point. Be careful that any cables or the angle of the chainstay is not affecting the straight drop of the plumb bob to the ground, as this can impact the accuracy of your measurement.
To measure proper setback, you'll need an assistant. Drop a plumb line from the indentation on the inside of your knee, just below your kneecap and behind the patellar tendon, with your crankarm in the forward, horizontal (3 or 9 o'clock) position. The ball and heel of your foot should be level or slightly heel up, depending on your pedaling style or if you're fitting for road or off-road. In this position, the plumb should bisect your pedal axle as a median point. There are many variations and arguments for being slightly forward or back from this point, and they depend mostly on your build and the types of events you focus on. If you have large joints and bones, or focus on an event that requires maximal, instantaneous power like criteriums, track, or cyclocross or mountain biking, you'll likely bisect the spindle or be up to a centimeter in front of it. If you're smaller-boned or focus more on longer events, you might still bisect the spindle or be up to a centimeter or more behind it.
Some fitters use the front of the kneecap as the place to align over the pedal spindle, others use the patellar tendon itself, below the kneecap and above the tibia tubercle. I prefer the spot under the kneecap and behind the patellar tendon, because I think it takes into account better the varying size and thickness of a rider's bones and connective tissue, and puts them over the pedals in a way that promotes good explosive power and agility, things that are key for North American style racing.
Being over or in front of the spindle puts more emphasis on your quadriceps and really maximizes the power created on the downstroke. The further back you move, the more you engage your hamstrings and de-emphasize the quads. They key is to either find a good balance, or favor one side based on your event.
Now that your saddle position is hopefully set, you can begin to focus on the front end. Reach is measured as the distance from the nose of your saddle to the center of your handlebars across the top. What your looking for in a neutral road position is a reach that gives you a right angle from your torso to your upper leg between the 3 and 6 o'clock position, and a right angle from your torso to your upper arm with your hands on the brake hoods.
Many riders who suffer from shoulder and upper back pain mistakenly shorten their reach, thinking it's caused by their bars being too far away. Often it's just the opposite; a short reach causes them to shrug their shoulder to take up the slack, leading to pain between the shoulder blades and below the neck.
At the same time, the further away your bars are the more your bike handling is compromised. If you're focusing on 'cross or criteriums, you might set yourself up a little short, so that you can reach your hoods and remain in a somewhat upright position. If you're strictly a road rider or someone who likes to attack and ride solo, you might push things to a longer, narrower, more aerodynamic set up.
Drop is measured as the distance between the horizontal planes of the deepest point of the top of your saddle and the center of your handlebars. (You can use the top rather than the center, but for repeatability I prefer the center.)
Again, how you set your drop is based somewhat on your discipline. If this is your road bike and aerodynamics are a concern you should set your drop as low as you can tolerate without compromising breathing room or pedaling dynamics, trying to achieve a flat back and forearms when on the hoods of your handlebars. Be cognizant of the point at which your pedal stoke suffers, you can't handle your bike, or your thighs touch your abdomen. You may even find that moving your bars higher is what allows you to achieve the flat forearms on your hoods, with your elbows bent. In any case, an aerodynamic position isn't helpful if the gains are negated by a loss in power output or bike handling. Sprinters often keep their bars low for more leverage while making max watts when out of the saddle, so for everyone, balance is always the key, Be mindful of too much forward hip rotation or a restriction of the diaphragm from too much drop, but also too much compression on the spine from sitting too upright, and not enough weight on the front wheel for good bike handling and traction.
If you're setting your position up for cyclocross, you might prefer to be able to reach the drops for descents or technical sections without having to bend over past that right angle point of your torso, and so set your drop very high.
There are many, many small measurements and adjustments I make when setting a rider up in person. But by focusing on these main four, you have most of what you'll need to set your position up, make changes when needed, and transfer that position from bike to bike.