Using a sharp, straight carving tool, trace the design by making small dots very close together along the outlines.
Use another tool (like one with a small "u" channel) to scrape off the top layer of the watermelon skin without punching through to the hollow center.
Allow the watermelon to sit for several hours to dry out a bit. This will dry out the carved area and it will turn a lighter shade making the design stand out a bit more.
Notes
See the images in the post for a better visual example of each step. You can freehand words or a design or use a printed template.The cost of the craft varies on the size of the watermelon you use and if you already have the carving tools at home. You can use pumpkin carving tools if you have them.