Is Iceland Really Expensive?
Along with its natural wonders Iceland comes with a reputation for being expensive. Here is all you need to know about how expensive Iceland really is.
Iceland is a dream destination for many people due to its breathtaking landscapes, geothermal spas, waterfalls, and, of course, the magical Northern Lights. But along with its natural wonders comes a reputation for being notoriously expensive. So, you may be wondering, is Iceland really that costly, or is this just a travel myth that’s been exaggerated?
Here we’ll dig into the pricey facts about Iceland.
How Expensive is Iceland: Sorting Facts from Fictions
It is true that Iceland isn’t a budget destination in the traditional sense. You’ll likely find prices for food, accommodation, and transportation to be higher than in many other countries. But that doesn’t mean it’s impossible to travel there without breaking the bank.
Here are a few key points to keep in mind:
- Accommodation: Hotels can be pricey, especially in Reykjavik and during peak seasons. However, hostels, guesthouses, and even roof top tent rentals offer more affordable alternatives.
- Food: Dining out is expensive, but many travelers save money by shopping at grocery stores like Bónus or cooking their own meals.
- Attractions: Nature is free. Waterfalls, geysers, black sand beaches, and volcanic landscapes don’t cost a thing to admire.
- Transportation: Renting a car in Iceland is one of the best ways to explore the country at your own pace—and often ends up cheaper than booking tours for every attraction.
So yes, Iceland can be expensive, but smart planning can help reduce costs significantly.
Why is Iceland an Expensive Destination?
There are several reasons behind Iceland’s higher price tags.
The number one reason Iceland is so expensive is probably the most obvious. Iceland is an island in the North Atlantic which means most goods don’t originate here. Importing the majority of its goods, drives up prices on food, fuel, and general consumer items.
As a result of this, Icelanders are generally paid higher wages, enjoying one of the highest standards of living in the world, which contributes to higher labor costs across all industries.
Iceland has become an increasingly popular destination, and prices, especially for accommodation and tours, have followed suit.
Summer is considered to be the best time to visit Iceland to take advantage of the midnight sun and milder weather, however this is a very short window of time, putting pressure on availability and prices during those few months. But more and more people are deciding to travel to Iceland in winter to see the Northern Lights
When is the Best Time to Visit Iceland on a Budget
Timing is everything when it comes to saving money in Iceland. Visiting during the off-season can mean lower prices on flights, accommodations, and even car rentals.
For Iceland, the shoulder seasons are late spring (May to early June) and early autumn (September to early October). At these times of year there are fewer crowds and more affordable rates. Winter can also be a surprisingly budget-friendly time, especially if you're after snowy landscapes and Northern Lights experiences.
If you want more insights on how to stretch your travel budget, check out the cheapest time to go to Iceland for tips and timing strategies.
How Much Things Actually Costs in Iceland
When planning a trip to Iceland, knowing what to expect in terms of daily expenses can help you avoid surprises and stay within your budget. While the country is known for its high living costs, there are plenty of ways to travel smart without sacrificing the experience. Below is a breakdown of typical accommodation prices to help you better prepare.
Accommodation Prices in Iceland
Where you stay will likely be one of your biggest expenses in Iceland. Fortunately, there are several options that cater to different travel styles and budgets.
Guesthouses & Hotels
Guesthouses are popular with travelers seeking local charm and a more personal touch. They're often family-run, include breakfast, and are located outside major tourist hubs, offering good value for money.
Hotels in Reykjavik and other popular areas tend to be more expensive, especially during the summer or holidays, so booking early is key.
Budget: $80–$150 per night (private rooms in guesthouses or basic hotels)
Mid-range: $150–$250 per night (3-star hotels or boutique stays)
Luxury: $300+ per night (4- and 5-star hotels with premium amenities)
Airbnb
Airbnb has become a go-to for many travelers in Iceland. Prices vary widely depending on the location and type of property:
Private rooms: $80–$130 per night
Entire homes/apartments: $150–$300+ per night
Staying in an Airbnb can help you save money on food, as most places come with a kitchen so you can cook your meals instead of dining out every day.
Camping & Campers
If you’re open to adventure and flexibility, camping or renting a camper van is one of the most cost-effective ways to experience Iceland.
Campsites: $10–$25 per person, per night
Campervan rental: Starting at around $100–$200 per day, depending on the season and van type
Camping gives you access to Iceland’s natural beauty 24/7, and campervans combine accommodation and transportation in one. Many campsites are equipped with restrooms, showers, and even cooking areas.
For travelers looking to cut costs and gain freedom on the road, check out these budget-friendly rooftop tent campers for rental to explore Iceland at your own pace.
Iceland Costs of Food & Drinks
Eating in Iceland can quickly add up but it doesn't have to. Let’s dive deeper into average prices, and be sure to check out our full breakdown of food prices in Iceland.
Costs of Eating Out in Iceland
A very simple meal at a casual restaurant in Reykjavik can cost around $20–$30. A three-course dinner at a mid-range place will run you $60–$100 per person.
What About Grocery Prices in Iceland?
Cooking your own meals is one of the easiest ways to save. Expect prices at stores like Bónus to be far lower than at convenience stores which stay open later, but are considerably more expensive.
How Much is a Cup of Coffee?
A regular cup of coffee will cost you between $4–$6 in most cafes. Specialty drinks and trendy spots may push the price higher. If you're a caffeine lover, plan for that daily expense or bring a thermos and brew your own.
Transportation Costs
Public buses in Reykjavik start at about $5 per ride, but schedules and coverage outside the capital are limited. Organized tours range from $60 for a basic Golden Circle tour to over $300 for more remote excursions.
Budget tip: Consider bundling attractions to maximize tour value, or better yet, rent a car and self-drive.
Car Rental & Fuel Cost in Iceland
Car rental prices vary widely based on season and vehicle type, but a standard car may cost $40–$90/day in low season and $100+ in peak months. Fuel is around $7–$8 per gallon (or roughly $2 per liter). Still, driving yourself is often cheaper than booking multiple tours and gives you more control over your schedule.
How Much Does a 1 Week Trip to Iceland Cost?
Here’s a rough estimate based on travel styles:
- Budget traveler: $1,200–$1,800 (hostels, groceries, camping/car-sharing)
- Mid-range: $2,000–$3,000 (Airbnbs, a few meals out, car rental)
- Luxury: $4,000+ (hotels, tours, fine dining, spa experiences)
Of course, your costs will vary depending on season, itinerary, and personal travel preferences.
How to Save Money When Visiting Iceland: Top Tips
Want to visit Iceland on a budget? Here are smart, actionable tips to keep more cash in your pocket:
1. Be Flexible
Traveling in the off-season and being open with your itinerary can unlock cheaper flights, car rentals, and lodging.
2. Shop at Budget Friendly Grocery Stores
Skip Krambúðin and Extra. Shop at Bónus or Krónan instead—it’s one of the easiest ways to slash daily expenses when grocery shopping in Iceland.
3. Don’t Buy Bottled Water
Icelandic tap water is some of the cleanest in the world. Buying bottled water is unnecessary and considered one of the most common tourist traps. If you find the tap water in your accommodation smells or tastes funny, it’s just the geothermal water backed up in the pipes. Let the water run for a bit and you will be treated to clean, ice cold water.
4. Cook Your Own Meals
Make use of Airbnb kitchens, campsites with cooking facilities, or campervan stoves to reduce food costs significantly.
5. Know About the Best Happy Hour in Town
Alcohol is rather expensive in Iceland, but many Reykjavik bars have happy hour specials. Discover the best happy hour places in Reykjavík.
6. Beware of Foreign Transaction Fee
Using your credit card is common in Iceland, but make sure it doesn’t charge international fees.
7. Prioritize “Free” Attractions & City Tours
From waterfalls and national parks to street art and scenic drives, Iceland has many free experiences. Not everything is free; some parking areas require payment. Check out the best free things to do in Reykjavík to make the most of your visit.
8. Get the Reykjavik City Card
To access museums, pools, and public transport for one flat fee, get the Reykjavik city card.
9. Choose Self-Drive Instead of Guided Tours
Guided tours can add up quickly. Opting for a self-drive itinerary can save you hundreds—plus it’s more flexible.
10 .Don’t Skip on Iceland Public Pools
Skip the pricey Blue Lagoon or Sky Lagoon. Local public pools often cost under $10 and offer a relaxing, authentic Icelandic experience with hot tubs, saunas and steam baths.
11. Book Your Trip Early
Flights, accommodations, and car rentals are all cheaper when booked months in advance. Early planning is one of the most effective ways to cut costs.
Final Words: Iceland Can Be Expensive, But Doesn’t Have to Be
Yes, Iceland can be expensive, but it doesn’t have to be. With some strategic planning, smart timing, and a willingness to DIY a few things, it’s entirely possible to experience this incredible country on a moderate or even tight budget.
Looking to explore the country affordably and independently? Check out affordable car rental in Iceland to get started on your road trip adventure.
