In IoT data processing, cloud computing alone does not suffice due to latency con- straints, bandwidth limitations, and privacy concerns. By introducing intermediary nodes closer to the edge of the network that offer compute services in proximity to IoT devices, fog computing can reduce network strain and high access latency to application services. While this is the only viable approach to enable efficient IoT applications, the issue of component placement among cloud and intermediary nodes in the fog adds a new dimension to system design. State-of-the-art solutions to this issue rely on simulation or solving a formalized assignment problem through heuristics only, which both have their drawbacks. In this paper, we present a five- step process for designing practical fog-based IoT applications that combines best practices, simulation, and testbed analysis to converge towards an efficient system architecture. We then apply this process in a smart factory case study. By deploying filtered options to a physical testbed, we show that each step of our process converges towards more efficient application designs.