A low-budget film is a motion picture shot on limited budget. Young or unknown directors often make low-budget films due to a lack of funding from studios, who are not willing to invest in a film which appears unlikely to become successful.
It is not determined what qualifies a film as a low budget production. 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 made for the same amount of money would be considered low budget.
The most successful low-budget film was 1999's The Blair Witch Project. It had a budget of $22,000 but grossed over $248 million worldwide. It had the highest ratio of box office sales to production cost in American film making history. 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 as unrealistic.
Another early example of a very successful low-budget film was the 1975 Bollywood "Curry Western" film Sholay, which cost Rs. 2 crore ($400,000) to produce and grossed Rs. 30 crore ($6 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, and Crouching Tiger, Hidden Dragon (2000), which had a budget of $15 million and grossed $214 million worldwide, making it the highest-grossing Chinese film of all time.
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, and Slumdog Millionaire, with a budget of $15 million and grossing over $360 million worldwide, have become very successful films. Napoleon Dynamite, Juno, and Slumdog Millionaire were supported by Fox Searchlight Pictures, a company that distributes many low budget films, which then perform very well at the worldwide box office.
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 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 The Chess Players (1977) at Rs. 20 lakh ($40,000).
Another example would be the 1977 cult film Eraserhead, which cost only $10,000 to produce (though this is in 1977 dollars). 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.
Primer (2004) is an 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.
In Russia , the 1997 crime film Brother , was made on around $10,000, but is considered by many one of Russia's best movies of all time , and was extremely successful when it was first released.
Paranormal Activity is a 2007 fictional, horror film written and directed by Oren Peli, was made for $15,000. Entertainment Weekly critic Owen Gleiberman gave Paranormal Activity an A- rating (A being the highest mark) and called it "frightening...freaky and terrifying" and noted that "Paranormal Activity scrapes away 30 years of encrusted nightmare clichés." 
In the UK, the 2009 fantasy film The Hunt For Gollum; a 40 minute independent film inspired by The Lord of the Rings with the budget only £3000