Iceland on a budget: what it really costs, and where to save

Iceland is expensive because three things are: hotels, the rental car and eating out. Fuel, groceries and the sights are not much different from northern Europe, and most of the best places in the country are free. A budget trip is one that spends on the first three carefully and on everything else like a local.

The tables below are the budget profile of the budget calculator, a couple in guesthouse or hostel rooms with a standard car, two paid activities each, in a shoulder month; the same model prices every itinerary on this site, so the figures move when prices do.

The budget profile across the year. Rooms and cars carry the seasonal change; everything else costs the same in January and July.

Longer is cheaper per day: the two activities and the first night near the airport spread over more days.

The budget profile for a week in a shoulder month, line by line.

Accommodation is the biggest line and the one with the widest spread.

• Guesthouses with shared bathrooms and farm stays run 30 to 50 percent under hotels in the same town, and the breakfast is often better.
• Hostels (Hostelling International has about thirty across the country) have private double rooms, kitchens and the lowest prices in winter.
• Two nights in each base instead of one: fewer check-ins, and the second night is often discounted.
• Sleep in the bigger towns on the route (Selfoss, Vík, Höfn, Egilsstaðir, Akureyri, Borgarnes), where there are several options, rather than at the one hotel next to the sight.
• Camping (May to September) is the real saving: about $15 to $20 per person per night at a campsite with showers and a kitchen; the Camping Card covers 40 sites for a flat fee. Wild camping with a vehicle is not allowed.
• Travel in October to April outside Christmas and the prices drop about 20 percent by themselves.

A restaurant main course is $30 to $45 and a beer $12; this is where a budget breaks or holds.

• Supermarkets: Bónus and Krónan are the cheap ones, in every town of any size; Nettó is open late. Buy breakfast, lunch and most dinners there.
• Book rooms with a kitchen or a shared kitchen; one cooked dinner a day is the single biggest saving after the room.
• Lunch is the meal to buy: soup with bread, the hot-dog stand, a bakery, or the fish-and-chips kiosks at the harbours, $12 to $20.
• Tap water everywhere, a refillable bottle, and the gas station coffee loyalty cups (Olís, N1) for the road.
• Alcohol only from Vínbúðin (the state shops, limited hours) or duty-free on arrival, which is half the price; bars are for one drink at happy hour, listed in the Appy Hour app.

The car is the second line and the one people most often get wrong in both directions.

• A small 2WD is enough for the Ring Road, the Golden Circle, the South Coast and Snæfellsnes from May to September, and costs about half of a 4x4.
• Book early for summer, take the gravel and sand insurance, skip the rest if your credit card covers collision (check it does for Iceland).
• Fuel is about $2.30 a litre; a Ring Road loop is 1,330 km and $200 to $250 of fuel in a small car. Fill up at the discount pumps (Orkan, ÓB, Costco in Reykjavík).
• Shorter trips without a car: the Golden Circle and South Coast day tours from Reykjavík cost less than a two-day rental plus fuel for a solo traveler, and the Flybus runs to the airport.
• Two or more travelers always beat tours on price with a car; four in a car is the cheapest way to see Iceland there is.

Almost every famous place in Iceland is free to enter; the paid things are the activities and the baths.

• Free: Þingvellir (parking fee only), Geysir, Gullfoss, Seljalandsfoss, Skógafoss, Reynisfjara, Dyrhólaey, Jökulsárlón and Diamond Beach, Dettifoss, Goðafoss, Kirkjufell, the Mývatn craters, every beach, every fjord, the northern lights.
• Nearly free: town swimming pools with hot tubs ($8 to $12) are the local alternative to the lagoons; Reykjadalur hot river, Seljavallalaug and the Hofsós pool cost nothing or little.
• Choose two paid activities and do them properly: a glacier walk and a whale-watching trip, or an ice cave and a lagoon, rather than five things half-seen.
• Museums: the Reykjavík City Card covers the city museums and pools for a day; outside the capital most are $15 to $20 and the folk museums are the good ones.

Some savings cost more than they save.

• The car’s insurance on gravel and sand roads; one chipped windscreen is $400.
• A 4x4 with winter tyres in winter beyond the South Coast, and in summer for any F-road; a 2WD on an F-road voids all insurance.
• A spare night’s flexibility in winter: a refundable rate beats a cheaper non-refundable one when a storm closes the road.
• Waterproof clothing; the packing guide has the list, and a wet day without it is a lost day.
• Travel insurance with search and rescue if you hike or drive the highlands.