When budgeting for your film it is important to have an understanding of the ELEMENTS needed to recoup budgets at different levels. The quality of the film, marketability of the film, relevance of the film in different territories, genre, CAST, and other elements play a BIG part in a distributor assigning value to your film. So it's more about the ELEMENTS (assuming you have a film distributors will want to buy in the first place) . In many cases the budgets are required to add these elements to your film. So the elements should work to determine the budget, not the other way around.

 The CaveatNow, before I am taken to task cause films get acquired at Sundance in multi-million dollar deals and the filmmakers start getting offers for three picture deals with studios, do consider that there are thousands upon thousands of features made every year and only a handful get acquired, let alone in multi-million deals at Sundance. So that is the caveat in all of this, if you get into a MAJOR festival like Sundance your film may have the chance at an all-rights deal with a mini-major. BUT, remember that only happens for a tiny fraction of the independent films produced annually -- these are the exceptions, not the rule and filmmakers can often find themselves falling into the trap of thinking this is the industry standard when it's pretty far from it. I recently sat on a panel with the Executive Director of the AFI Fest in Los Angeles and he noted to the audience that part of the reason that we hear about all these big acquisitions in the news and what makes them actually newsworthy is that they are a rare occurrence. If it happened all the time, it wouldn't be newsworthy. I thought this was a great way of making this point. This is not said to kill your dreams, rather it's to point out the importance of reasonable and responsible budgeting and if your plan is to get into Sundance and go for that big all-rights deal, since you can't control that, you still need to make careful considerations when determining your film's budget.

 THE ELEMENTSFor indies, especially if you have no stars, the lower the budget the better because, as you've all heard before, acquisitions prices are at an all-time low, given the decrease in costs to make a movie a glut of content has entered the marketplace and driven prices down, and as a result it's a buyer's market.

 $250K and under - A saleable genre always helps, but now more than ever it's important to have a distinct audience for your film which is easy to reach via promotional partners, online or via any other low-cost outreach methods so if the film fails to get a significant distribution deal, or enough foreign deals to recoup the budget, you can market and hopefully make the money back through self-distribution. And I would recommend shooting on HD - the higher the quality, the better. Try to avoid DV as it isn't really cutting it anymore with distributors.

 $500K - If your budget is in the $500K range it is going to be that much harder to recoup and you'll definitely need cast elements that will help to attract distributors. Not only will you need a high-quality film in a marketable genre (and NO shooting on DV), but you'll also need a few B stars in your cast to try to leverage some good foreign distribution deals and a favorable U.S. deal. The film had better look VERY GOOD and professional and like it cost way more than it actually did. Shooting on 35mm can still be a boon. If not 35mm, at the very least high-end, not consumer-grade, HD. 

$1 MIL and higher - In this market, you need a highly marketable film and for a million dollar budget, AT LEAST 1 A-list star in a starring role. For films over a million, you'll need to cast 2-3 A-list stars (again, in starring roles) in order to justify the budget. As a general rule, although there are exceptions, you will need that high a budget in order to pay the actors. And 35mm is still preferable, although you may be able to get away with very good-looking HD, that can rival film.If you do not get an all-rights deal at a festival like Sundance or Toronto, then you're looking at selling the film territory by territory and foreign numbers won't be high unless there was a U.S. theatrical release and there are 2-3 MAJOR names attached.I have seen filmmakers spend over a million dollars on films with no known cast AT ALL. And I have seen these same filmmakers shocked (and panicked to say the least) when they cannot make sales on the film at all. This is not the kind of spot you want to be in.Even if you follow all these guidelines, your film still may not make enough in sales to recoup its budget. Good films which are marketable and have all the elements in place get passed over all the time. Consider that at the 2008 Cannes festival and market, the new Charlie Kaufman film, SYNEDOCHE, NEW YORK, Steven Soderbergh's CHE and TWO LOVERS, starring Joaquin Phoenix and Gwyneth Paltrow, and other major films, all left without the all-important and lucrative North American distribution deal. These are all extremely high-profile films and all the filmmakers and cast have serious track records of profitability. Now, eventually we will probably see all these films in multi-plexes, but if something like this were to happen to the average indie that wasn't made by someone like Soderbergh, a celebrity filmmaker, the future wouldn't look so good for recouping that budget.Please consider carefully and budget wisely.