A low-budget film is a motion picture shot with little or no funding from a major film studio or private investor. Many independent films are made on low budgets, but films made on the mainstream circuit with inexperienced or unknown filmmakers can also have low budgets. Many young or first time filmmakers shoot low-budget films to prove their talent before doing bigger productions. Many low-budget films that do not gain some form of attention or acclaim are never released in theatres and are often sent straight to retail because of its lack of marketability, look, story, or premise. Modern-day young filmmakers rely on film festivals for pre promotion. They use this to gain acclaim and attention for their films, which often leads to a limited release in theatres.
Some low-budget films gain a cult following and this often leads to a wide release. A financial figure has not been determined which would define low-budget productions. The term "low budget" is relative to a certain country and varies upon genre. For example, a comedy film made for $20 million would be considered a modest budget, whereas an action film or science fiction made for the same amount of money would be considered low-budget because of the large amount of money required to produce mainstream films of these genres. The entertainment value and success of low-budget films depends on the genre, premise, story, and financing of the film, as well as the actors and their performances. A low-budget sci fi thriller may perform better at the box office because they require less visual effects, is story driven, and cheaper to make overall. Likewise, a low-budget sci fi action film may not perform well because these films are more action driven and more expensive to create, something a film with a low budget may not be able to provide in good quality. In many cases, low-budget filmmakers often create story driven or psychological films in all genres. Low-budget films can be either professional productions or amateur. They are either shot using professional or consumer equipment.
The money flow in filmmaking is a unique system because of the uncertainty of demand. The makers of the film do not know how well the movie they release will be received. They may predict a movie will do very well and pay back the cost of production, but only get a portion back. Or the opposite may happen where a project that few think will go far can bring in more profit than imaginable. A big gambling variable that is also involved is the use of stars. Frequently stars are brought on to a project to gain the film publicity and fame. This process can be profitable, but it is not a foolproof mechanism to successful funding. 
Notable low-budget films
One of the most successful low-budget films was 1999's The Blair Witch Project. It had a budget of around $60,000 but grossed almost $249 million worldwide. It spawned books, a trilogy of video games, and a less-popular sequel. Possibly an even more successful low-budget film was the 1972 film Deep Throat which cost only $22,500 to produce, yet was rumored to have grossed over $600 million, though this figure is often disputed.
Another early example of a very successful low-budget film was the 1975 Bollywood "Curry Western" film Sholay, which cost Rs. 20,000,000 ($400,000) to produce and grossed Rs. 3,000,000,000 ($67 million), making it the highest-grossing film of all time in Indian cinema. Other examples of successful low-budget Asian films include the Chinese films Enter the Dragon (1973) starring Bruce Lee, which had a budget of $850,000 and grossed $90 million worldwide. Wayne Wang's film Chan Is Missing, set on the streets of San Francisco's Chinatown, was made for $20,000 in 1982. San Francisco Chronicle columnist Herb Caen wrote that the budget would not have paid for the shoe laces in the film, "Annie".
Rocky was shot on a budget of $1 million, and eventually grossed $117.2 million domestically, with a worldwide gross of $225 million. Halloween was produced on a budget of $320,000 and ended up grossing $47 million in the US, with a worldwide gross of $60 million. Napoleon Dynamite cost less than $400,000 to make but its gross revenue was almost $50 million. Films such as Juno, with a budget of $6.5 million and grossing $230 million worldwide have become very successful. Napoleon Dynamite, Juno, and Slumdog Millionaire were supported by Fox Searchlight Pictures, a company that distributes many low-budget films, many of which have performed very well at the worldwide box office. It is common, though, for contemporary low-budget films to be produced without a distributor. In cases such as these, the producers hope to get distribution through successful audience reaction at film festivals. The Swedish horror film Marianne is a contemporary example.
The UK film Monsters is a recent successful example of bringing what was once considered the exclusive preserve of the big studios—the expensive, special effects blockbuster—to independent, low-budget cinema. The film's budget was reported to be approximately $500,000, but it grossed $4,188,738 at the box office.
A considerable number of low- and modest-budget films have been forgotten by their makers and fallen into the public domain. This has been especially true of low-budget films made in the United States from 1923 to 1978 (films and other works made in the US during this period fell into public domain if their copyrights weren't renewed 28 years after the original production). Examples include a number of films made by Ed Wood or Roger Corman.
Some low-budget films have failed miserably at the box office and been quickly forgotten, only to increase in popularity decades later. A number of cheaply made movies have attained cult-film status after being considered some of the worst features ever made for many years. The most famous examples of this later-day popularity of low-budget box-office failures include Plan 9 from Outer Space and Manos: The Hands of Fate.
Additionally, some low-cost films that have had little (or modest) success upon their initial release have later been considered classics. The Last Man on Earth was the first adaptation of the novel I am Legend by Richard Matheson. Due to budgetary constraints, the vampires in the film were zombie-like creatures instead of fast and agile monsters portrayed in the novel. This approach (and film) was not considered a success at the time, but it inspired George A. Romero's work in his film Night of the Living Dead. Thus The Last Man on Earth became a precursor to numerous zombie films, and fans of those films later re-discovered the original, making it a cult classic.
A micro budget film is that which is made on an extremely low budget, sometimes as little as a few thousand dollars. An example of such would be the popular 1992 film El Mariachi, in which the director Robert Rodriguez was unable to afford second takes due to the $7000 budget. Despite this, it was a success both critically and commercially, and started the young director's career.
Some of the most critically acclaimed micro-budget films were by the Bengali film director Satyajit Ray, his most famous being The Apu Trilogy (1955–1959). The first film in the trilogy, Pather Panchali (1955), was produced on a shoestring budget of Rs. 1.5 lakh ($3000) using an amateur cast and crew. The three films are now frequently listed among the greatest films of all time. All his other films that followed also had micro-budgets or low-budgets, with his most expensive films being The Adventures Of Goopy And Bagha (1968) at Rs. 6 lakh ($12,000) and Shatranj Ke Khilari (1977) at Rs. 20 lakh ($40,000).
Another example would be the 1977 cult film Eraserhead, which cost only $10,000 to produce. Director David Lynch had so much trouble securing funds that the film had to be made over a six-year period, whenever Lynch could afford to shoot scenes.
Andreas Schnaas' 1989 horror film Violent Shit was shot on a budget of $2,000 with a rented camcorder over the course of four weekends, with a cast of amateur actors consisting mostly of acquaintances of Schnaas.
Primer is a 2004 American science fiction film about the accidental invention of time travel. The film was written, directed and produced by Shane Carruth, a former mathematician and engineer, and was completed on a budget of only $7,000.
In the UK, the 2006 film The Zombie Diaries was written, produced and directed by filmmakers Kevin Gates and Michael Bartlett. The film cost £8,100 to be made, and has to date grossed over one million dollars worldwide.
The 2010 comedy film Le Fear was shot on a budget of just £1,900.
Paranormal Activity, a 2007 horror film written and directed by Oren Peli, was made for $15,000 and grossing about $193,355,800 (adjusted by inflation: $212,550,420).
Entertainment Weekly critic Owen Gleiberman gave Paranormal Activity an A− rating (A being the highest mark) and called it "frightening...freaky and terrifying" and said that "Paranormal Activity scrapes away 30 years of encrusted nightmare clichés."
Clerks was written and directed by Kevin Smith for under $27,000 in 1994 which he paid for on his credit card and grossed over $3 million in theatres. Clerks launched Smith's career as a director and he has made several considerable higher budget films.
in 2009 and 2012 Another Day Another Life, a 4-minute suspense film, and Life! Camera Action..., a 90-minute feature, were shot for $100 and $4000 respectively. Both films received high critical acclaim, earning over 100 international awards and accolades in various categories from around the globe. Another Day Another Life was an official selection at the Short film corner - Cannes Film Festival 2009.
I Am My Own, a Swedish film completed in 2013, was made for $10,000. Writer, director, and producer Johan Bergqvist wrote shot and edited the film with a small crew in two years, with principal photography done in 16 days in the fall of 2011.
AUGUST 2, an Indian feature film, was shot on a microbudget of just 3 lakhs Indian Rupees (around 6000$) in the year of 2012 over the course of 12 days. The director of the film, "P V Krishnan", acted as one-man crew (screenplay writer, casting director, cinematographer, editor, VFX artist) and also played a cameo role in the film.
The Monster of Phantom Lake was produced in 2006 for less than $10,000. Its success allowed writer-director Christopher R. Mihm to create an ongoing series of low-budget 1950s-style monster movies, including 2013's The Giant Spider.
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