Words. Rhythm. Tone color. Instrumentation. Arrangement. Tempo. Time signature. Melody. Counter melody. Harmony... The list of "song ingredients" is almost infinite and can be a bit overwhelming. After years of experimentation here's what works for me.
Obviously, song writing is a deeply personal persuit. Different things work for different people. The secret is to experiment endlessly and to almost never be satisfied. This takes a good amount of self disipline and work ethic.
A title. Often times a title will inspire a story line, a hook, or a melody. Come up with a hook using a title you've seen on a book, movie, magazine, etc., or use a cliche'. For example: Guitar picks are "A Dime A Dozen." The cliche' is useful as a song title because it is immediately familiar to a potential listener.
From "A Dime A Dozen" invent a catchy hook or melody line. Usually simple melodies are more infectious than the complex. At this point, write lyrics which support the title. You now have a "chorus" from which to work. This is where the verses come in. Write verses which support the chorus but with a different yet complimentary melody. I refer to this method as writing a song from the inside out. Assuming we now have a "lump of clay" with which to work, we can start work -shopping the idea.
O.K. I'll bet the song is in common (4/4) time. Try the song in 3/4 with a waltz-like feel. Try it in several different styles such as reggae, country, blues, jazz (this will require you to "color" your chords a bit), classical, etc. Often times I find the song will seek it's own style, which is often different than the style in which it was written. Sing the song in differing styles. Sing with a false accent, or as a barbershop quartet. Sing it solo, or as a duet, sing it like Mick Jagger, David Lee Roth, or Englebert Humperdink, and always remember to sing it like "you"!
Once the song "settles" into a style you can begin to give it the appropriate instrumentation. I once wrote a song which, after a lengthly "work-shopping", was in the 1920's style. I added clarinets, trombones, saxes, and a banjo. The point is the 1980's elecric guitar "dive bomb" has no place in a song of this style. The lyrics were also true to the era as it addressed prohibition: side note (songs don't always have to be about a girl). This gave the song an authentic feel and caused many listeners to believe it was actually written in the 20's! Through extensive work-shopping I have written songs in almost every style. This also serves to keep your songs and the songwriting experience fresh and interesting. It helps to prevent my next point, "assembly line" song writing.
Once you've penned a few songs using this method, start breaking the rules! Push yourself. To continue to use only one method of songwriting makes for the mundane. Attempt to write a song where the words to the chorus differ every time. Write a song where the words don't rhyme. Write in a linear fashion from front to back, back to front, as well as inside out. As I mentioned earlier, utilize different subject matter. Do we really need to hear yet another song of forlorn love? Write a song which consists of only verses, or write an instrumental. The possibilities are endless.
The art of songwriting is just that, an art. Try to avoid the step-by-step method (although I realize this article is largely that! ) Push, pull, twist, shake, rattle, and roll all of your ideas to exhaustion. It will yield some interesting ideas and I guarantee you will suprise youself.
Remember, not every song you write will be "hit" material. Don't fall in love with your work and don't be afraid to scrap an idea that won't produce results. It's only a song, you can start another. Songwriting should be enjoyable, so keep it that way. I have only touched lightly upon this complex process but hopefully it will help to "prime your pump" (hey, there's a good song title). Good Luck!