The basic necessary element of any demo is strong material for the format/market your music is geared towards. The most commercial song should always be sequenced first as some A&R persons may never get past that song if it does not hook them. A demo consisting of 3-4 songs is the standard. Production or sonic values are a factor to some, so you should seek to create the best sounding recording you can afford, since that is what your competition is doing. With new technology a person does not have to spend a lot. Just make sure the vocals and whatever other aspects of your "sound" that make you special jump off the speakers. However, forget the fancy packaging, etc. as form never wins over substance. Moreover, if you are developing a following and selling records you have already proven your worth, so no one will really care what your demo sounds like anyway. Of course, if the purpose of your demo is also to sell to fans, you will need to make it sound good so a buyer feels they bought something of quality.
Ben McLane, Esq