A major challenge, and thus opportunity, in the field of human-computer interaction and specifically usability engineering is designing effective user interfaces for emerging technologies that have no established design guidelines or interaction metaphors or introduce completely new ways for users to perceive and interact with technology and the world around them. Clearly, augmented reality is one such emerging technology. We propose a usability engineering approach that employs user-based studies to inform design, by iteratively inserting a series of user-based studies into a traditional usability engineering lifecycle to better inform initial user interface designs. We present an exemplar user-based study conducted to gain insight into how users perceive text in outdoor augmented reality settings and to derive implications for design in outdoor augmented reality. We also describe lessons learned from our experiences conducting user-based studies as part of the design process.