Final image:

Procedure:

A.) Creating Buttons:

1.) Open a new document of any size and have the background color as ‘Black’.

2.) Create two new layers and fill them with Black color.

Name one layer as Background1 and the other layer as Background2.

3.) Select the Background1 layer and right click and select – Blending options or use the Layer Menu  > Layer Style > Blending options.

Select the ‘Gradient Overlay’ option and select the Gradient- Two color of colors white and black which is already available as defaults. Also use the default options without making any changes.

4.) Select the Background2 layer and right click and select – Blending options or use the Layer Menu  > Layer Style > Blending options.

Select the ‘Gradient Overlay’ option and select the Gradient-‘Dark Spectrum’ which is already available as defaults. Also use the default options without making any changes.

5.) Use the Elliptical Marquee Tool and SHIFT + HOLD and drag to draw a circular selection and fill it with ‘White’ color. Name this layer as Button1.

6.) Right click the Button1 layer and select blending options.

Use the Bevel and Emboss Blending option. This is the only option we are going to use.

7.) Bevel and Emboss settings:

Please refer to the following diagram for the adjustments to be made.

8.) Set the mode of this layer to – ‘Luminosity’.

Make copies of this layer as required. Requirement is based on the number of Texts to be placed.

In this example, the text used is DROPS and therefore totally five buttons are required.

9.) Hence select the Button1 layer and click CTRL + J to duplicate the layer four times so totally you will have five buttons. Name the layers as- Buton2, Button3, button4, Button5.

B.) Creating Text:

Since each alphabet has to fit in a button, you can not use the Text tool once and type the whole Text.

Hence we have to type each alphabet each time such that, there would be a total of Five Text layers.

1.) Type a text (in this example, D) with

Font- ‘Georgia’ and Style-Regular

Size- 115pt and sharp effect.

Color- Black

2.) Repeat the same by typing R, O, P, and S each time.

Type all the Alphabets in CAPS.

(You can also follow another procedure where you type the text in full, that is – DROPS and create a copy of the layer and keep the original for future reference and rasterize the duplicate layer.

Once rasterized, it becomes an ordinary layer so now you can use Magic wand tool and select each alphabet and copy and save each in a new layer. Follow the procedure for all alphabets.)

3.) Now move the Texts over the Buttons.

NOTE: Change the mode of the Text layers to- ‘Soft Light’. Only then the Text will look as if placed inside the button

This is how the layers should appear. The reason why my Text layers look like ordinary layers is because I rasterized them and followed the other procedure mentioned above in the brackets.

You can also use Color Overlay options for each button to apply different colors, which may look like this!