Budgeting an indie film is a bit of an oxymoron. Can you budget something when you have no money? Absolutely. And you must. Every time I budget a film, I first assess its perceived value. I say perceived because you won't know the real value until you find investors who agree with the proposed value, sell the film, release it to audiences, and get your money back. To me, the real value is what an audience is willing to spend on your film. If you make a $1 million film but your audience only spends $200k on it then you really have a $200k film on your hands.
As I am assessing a script, I ask myself the following questions:
How do I think it will perform in the marketplace? I look at how similar films have performed in the last three years or so. I also have to take into account the current atmosphere. As we have seen over this past year, independent films have been lowering in value.
Who is the director? Will he or she attract the right talent that will mean something to the box office? Your director is a valuable asset to your film. He may be award-winning or have the right relationships to talent or he has a proven track record for making movies that appeal to a sizable audience, which translates to butts in seats. If he or she is a first-time director, I automatically set the bar for the financing at below $1 million. The smaller your budget can be with a first-time director, the better.
What kind of talent will this script attract? If I know there is a role or two that will appeal to an actor with box office value then I will bump the budget a bit to accommodate for that actor's pay.
What kind of story is it, small intimate drama or medium-sized with some action and visual effects sequences, etc.? There is a significant difference in price between a dialogue heavy drama and one that relies on effects to tell the story. Get familiar with production and post production costs. Call around to vendors and get price quotes. And get your hands on other budgets in a similar budget range. When I was starting to produce my own films, I had a binder full of budgets from other productions that I would sift through for approximate costs. How I got my hands on those budgets is another story. Get creative. You will find ways to do it. I worked in production at the time on films that were similar to what I wanted to do and had access to budgets. Friends who work in production are great resources. Use them.
Once you have your first draft of the budget. Find ways to slash it. And once you have settled on a figure that you hope to get, figure out how to make it happen for half the money -- just in case you don't get it all. Remember Pieces of April? Peter Hedges thought he had $4 million to make the film. The bottom dropped out of the financing and he suddenly had a little over $100k to make it. And he did.