Depends on the pan, the pick-up and mostly on the pump.
Stock stuff, you typically shoot for about 3/8" to 1/2". High volume, you are talking typically 1/2" to 3/4". Titan recomends a minimum of 3/4" and would like an ideal clearance of 1".
The reason is depending on the volume of the pump and pickup design, you might induce cavitation with the pickup to close to the bottom of the pan. Oil cant flow into the pick-up area fast enough. The down side of setting the pickup excessivly high is the quart or two of oil that is lower than the pick-up is not capable of flowing through the system.
Kim's response is getting me thinking again (yeah that is scary) I know hte issue of leaving oil in the bottom of the pan, and of cavitations so I was wondering if any had thought of or tried running a pan that is setup like a dry sump system pan with pickups on the ouside then run it back through and into the pump pickup. You could run multiple pickups that way and not starve the pump and not worry about cavitating now leaving the quart or 2 of oil that is basically just filler.
Anyone have any thoughts on this idea.