Before starting it always is wise to read the documentation associated with an extension. Most extensions have homepages and forums, and it is a good idea to look at them first. If there is a README file included with the extension, you should read it.
For most extensions and most users, the procedure will be:
There are some situations in which this procedure will not work.
Sometimes you need to unzip the file locally prior to installing. If you get an error saying that the file is not in the correct format, the need to unzip is a common cause of this. After unzipping try installing the individual items. Note that the files you upload using the installer still need to be zipped.
Sometimes you cannot use the automated installer. For example, very large extensions may exceed the maximum upload size allowed by your host.
Also, If you see an error like this:
Warning: is_dir() [function.is-dir]: open_basedir restriction in effect. File(/) is not within the allowed path(s): ...
this is because of a restriction of your hosting account which leads Joomla! to try to check if the root directory exists. You will not be able to use the automated installer.
First, unzip all of the files locally. Then transfer the files (using FTP) to a folder in the install directory (for example administrator/components/com_installer/components) for the type of extension you are installing. Then use the installer, but select "install from directory" indicating the correct folder name. This folder name should be an absolute path from the root of the filesystem.