This paper presents a design method that enhances the ludic value of interactive everyday products. The purpose of this method is to help designers create meaningful products in the digital realm while preserving the benefits of technology. There is a great opportunity for design to enhance the extra experiential value of products and systems in a world with digital technologies. We highlight one major way of approaching this opportunity by infusing items used in domestic settings with ludic value. In this paper, we clarify the meaning and key attributes of the ludic value of products, as well as present a review of existing research in the design of interactive everyday products. Based on this clarification and the supporting literature, we propose a new interaction design method - Design by Tangible Stories. Our method has three key features to support the openness and engagement aspects of the ludic value: (1) the creation of narratives about imaginary creatures, (2) embedded serendipitous functions, and (3) physical interaction. Through several design experiments and user trials with our method, we found that everyday products can be transformed into interactive products that have extra experiential value. The design experiments showed that everyday products can be recreated and used as a mediator which supports ludic activities. The proposed method enables us to understand new interaction and functional opportunities in the design of interactive everyday products.