Magic! It's a loaded word, carrying more weight for some than others. Likewise, it bears the possibility of meaning something different to virtually everyone. When I'm writing stories, I give thought to how superhuman abilities (those outside mundane experience) will be portrayed and their capacities. Any writer who is going to use such abilities as significant elements of their stories should do so. You may have a detailed system formulated or you may be in the early stages of doing so. You may have no idea how to proceed at all. Below are some of the ways I handle magic in my writing. Maybe something there can help you or just amuse you. If you have any questions or would like help solidifying rules of your own, I'm always happy to help.
Psychic abilities are, naturally, consigned to the realm of the mind. Those I treat as tools of the brain. Some writers use them interchangeably or synonymously with magic. Some plots may have characters using one system to fake the portrayal of another (using psionics or magic to create the illusion of some physical prowess or pretending that a mental ability is actually a magical one, for example). They're extraordinary ways for the brain to interact with the world without having to use the normal systems. Telepathy allows the brain to bypass speech and hearing. Psychokinesis lets the brain bypass the use of hands. Pyrokinesis saves the brain a trip to gather fuel and matches. The supercharged brain really starts to show its stuff when it allows someone to do things he couldn't normally do with any amount of skill or practice, such as reaching and perceiving through solid barriers or evacuating a room of its air.
Magic has other capabilities. Magic allows for simple shortcuts, but with the proper use of will and imagination it also allows physics to be ignored or at least taunted. Some users of magic make this sort of thing look easy, while the cost to others can be seen more readily. By that, I mean, some are born to magic: faeries, dragons, even the rare human adept. For such beings, use of magic comes so naturally that any cost for common exploitation of their special communication with the universe seems negligible.
For those without such easy access, things become more complicated. That's when the traditional concepts of sacrifice become involved: years of study, items of rarity or unique sentiment, blood, lives... One of the common sacrificial items I decided to incorporate into stories was precious gemstones, with different spell effects requiring specific stones that would be consumed with the initiation of each spell. Different rules, of course, apply to enchanted items that may have been imbued with the power to generate a specific spell effect or to take on a unique quality in perpetuity.
Beyond the quick and dirty spell there will exist effects of signifcance that require more effort and power. That's where the ritual comes in, which calls for one or more magic practitioners to perform a spell of grand working. It will, of course, be something done in more than one part and call for the use of many more spell components than normal. A magic circle and ancient symbols of power are certain to play a part. Depending on the nature of the ritual, fire, water or blood will likely be essential elements, possibly all of them. Then, we get into the most dangerous part. It's something that may have been going on since the use of the simplest of spells a given magician has been using, but when moving up to castings of greater power, additional assistance and higher costs go along with the action. That's when your characters get into talking with the mysterious entities from other dimensions. To such beings, mere mortals may have pledged all manner of things tangible and not in exchange for access to fractions of their vast unknowable power. These relationships tend to create situations where a character is beholden to another in some manner of intractable bargain, which is a source of great tension or conflict when properly utilized.
Additionally, the nature of each type of magic relegates it to a specific universal alignment that is connected to a dominion of influence. Within each alignment are subsets of discipline governing the uses of the magic. Lastly, each alignment is also associated with a color. These details make the creative aspects seem rather dry and technical when spelled out like that, but breaking them down in that manner affords consistency to a subject that could, by its very nature, run out of control if not properly managed. Assigning specific areas of influence allows me to know ahead of time things that a particular magic slinger might do and things that might be beyond her ability. Some facets of your planning may produce results that are never again seen by any eyes beyond your own, but I don't think your characters or your stories can suffer from you knowing too much about them. Consideration of such rules and limitations is something I feel to be important because of a memory I devoted its own brain cell to long ago: if anything can happen, who cares what does?
Allow me to illustrate the result of my machinations with a few characters from Theobroma: Child of Fire and Blood:
The necromancer Attan relies on both years of study and his devotion to Death to empower his practice of magic; Attan's invocations are facilitated through his raven familiar Dalar, especially anything requiring greater complexity or effort; he dresses largely in red, the color of the alignment of Dark Order and thus the color of any of his magical special effects; aligned with Dark Order, many of his spells are associated with Time as well as Death; because he works with one of the Order alignments, his workings have a foundation in dedicated study and preparation (including carrying a hefty personal grimoire and numerous powders, potions and spell components)
Kieren Sha is part-faerie, aligning her with Bright Chaos; any visible manifestations of her magic use are as purple as her eyes; the use of specific magical effects comes to her easily, but cost her in physical stamina; because she is associated with a specific alignment by virtue of her birth, magical effects of other alignments are particularly difficult for her to access; because her magic stems from a Chaos alignment, it has a foundation in emotion rather than study (cracking a book to learn a spell is foreign and in some cases loathsome to her). Born a child of Bright Chaos, her connection to Coyote, the realm of Magick and any attendant gifts have not required her to make any bargains, but still put her under the immortal trickster's special notice more often than she finds convenient.
Every magic user takes it upon themselves to find their way, discerning some path by which they feel they may get the universe's attention, for good or ill, and dealing with the consequences later. The writer who would deal with such characters, as always, has the privilege of squeezing as much entertainment out of their journeys and choices as possible. That doesn't mean letting utter chaos run amok, but imposing limitations as one would on a willful child. Certainly, display the incredible, but never forget that such things are most interesting when the event the audience sees as fantastic impacts on the characters as a fantastic pain in the ass.