i get it get it little larger than the pen diameter , then where it over wraps I cut it with a razor blade and remove a small piece from each end leaving a perfect match. To get a straight cut I place the pen next to the edge of 1/4" masonite and use that as the straight edge.
I use photoshop to get the size tuned in after using (PI)x(DIA) to get close. I do not try to make a butt join but overlap one edge just a little. I like to have a black border and use a sharpie marker to mark the overlap edge black to hide it. I print the label then use a metal ruler and Exacto knife to cut the label to size.