To determine the total cost of a spell, start with the mana cost or alternative cost you're paying, add any cost increases, then apply any cost reductions (such as that of Sanguine Indulgence). The mana value of the spell remains unchanged, no matter what the total cost to cast it was.

Sanguine Indulgence's first ability looks at how much life you've gained in the turn. It doesn't care if you also lost life, even if you lost more life than you gained.