[Stevenbdavis]

Passenger elevator codes have strict guidelines. see ASME A17.1
Whatever your application, this is a general explanation of what you are trying to accomplish with the counterweight.

From How Stuff Works

"The ropes that lift the car are also connected to a counterweight (4), which hangs on the other side of the sheave. The counterweight weighs about the same as the car filled to 40-percent capacity. In other words, when the car is 40 percent full (an average amount), the counterweight and the car are perfectly balanced.
The purpose of this balance is to conserve energy. With equal loads on each side of the sheave, it only takes a little bit of force to tip the balance one way or the other. Basically, the motor only has to overcome friction -- the weight on the other side does most of the work. To put it another way, the balance maintains a near constant potential energy level in the system as a whole. Using up the potential energy in the elevator car (letting it descend to the ground) builds up the potential energy in the weight (the weight rises to the top of the shaft). The same thing happens in reverse when the elevator goes up. The system is just like a see-saw that has an equally heavy kid on each end."