I don't think anyone can actually tell you exactly how big YOUR stencil should be. Some things to consider though:
The stencil can be as big as you want it to be, but for the easiest application the design on the stencil should be smaller than the pad o the etching machine that you use. This still allows for a bigger stencil than most anyone actually uses.
Next, the stencil has to fit on the type of blades you make. Obviously, most any stencil will fit onto most any blade but that's not really good enough. If your blades have a ricasso and you want to mark there, then the stencil has to fit the ricasso. If your blades are ground (either hollow or flat) only on the lower part of the blade then the etch often looks good when placed on the unground portion of the blade at the top. A completely flat ground blade can take most any size logo.
If the logo contains complex detail graphics then making it larger is about the only way you'll be able to see the detail. Logos containing just words can be most any size. Get some copies of Blade and Knives Illustrated and look at all the different sizes of logos on people's knives and how they are applied.
I had my logos made in two sizes in order to have logos that fit and look well proportioned on the various size blades that I make.
What looks good is a matter of personal preference, there really aren't any rules for this sort of thing.....
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