A door knob template will help you make sure you get the right-sized holes in the right place on your door.
Place the Template
The ideal place for your door knob is about waist height. There's no specific place you must put it, but about waist height is the most convenient and will make the door easy to open, especially if you're carrying something or you have your hands full.
Determine where you want the knob to be, and then place the template against the door. You may decide to move it once you see the template in place. The important thing is to get it exactly where you want it with the template before you've started drilling. Once you're satisfied with the placement, use an awl to mark the edges according the template. Slide the awl around the edge of the hole so you can see it easily.
Then use a hole saw to bore the hole according to where you marked it with the awl and the door knob template.