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How expensive is Iceland?

Updated: Jan 24


It depends on how you look at it.

I just got back from a 12 day hybrid travel trip to Iceland this past May. And it was my second trip to this diverse country in less than twelve months. Before I traveled there the first time, I had read a lot about the anticipated costs and quite frankly, expected it to be far more expensive than it actually was. I am not saying it was cheap. But aside from a few key areas of expense, I didn’t feel it was any more expensive than traveling to places like Hawaii, San Francisco-USA or Australia.

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Perspective

I do recognize that a person's cost bias is, in part, related to both travel experience and age.

When I began traveling in my 20’s, I was just beginning my travel life, just starting a career and didn't have the same resources available as I do now. So I backpacked, stayed in hostels and camped when I could to save money. Now, I still look for a good cost-to-value ratio, but my resource base has changed and travel is now a priority in my life. So every so often, I am willing to spend more money on items like lodging, wine and meals. But regardless, everywhere I have traveled between those leaner years and now, there have always been options for touring both ‘on the cheap’ or in high-end, luxurious style. This is true of Iceland as well. Granted, there are some items that no one can get around when traveling in any remote country or island, hence the reason for this blog post. If it isn't produced on location, there is that additional import cost to get it there. And that of course, gets passed on to the tourist, as well as to the residents. Remember, there is no increased ‘tourist’ rates. You are paying the same as what the locals pay.

So take a look below. From my experience, these are...


The 6 areas that will take up most of your travel budget in Iceland

Gas

Okay, this is expensive. This is also the one item that we found most difficult to budget for ahead of time. I tried to simply add up the Ring Road mileage and estimate our fuel needs from that number. But I didn't consider all of ways we used the car. There were times we backtracked, visited a site twice, drove back and forth to dinner or spent a few days in one area visiting different sites at different times of day, in a non-linear fashion. The Ring Road is about 828 miles (1332 KM). But we ended up doubling that mileage in just over 12 days. Granted, we also did some remote exploration that most travelers would not do. But I’d recommend budgeting for an additional 20-30% more fuel than the your calculated mileage may suggest.

TIPMake sure you get a pin for your credit card before you leave home or you may end up paying more when you fuel up. Gas stations in Iceland are often unmanned and require a pin when you use a credit card. We use Capital One for all of our travel because they don’t charge international use fees. But typically, a pin isn't required when using it for foreign transactions. So we didn’t think to get one before we left for this trip. This meant we were stuck using our bank debit card, which in turn did charge us additional fees. So learn from my mistake and remember to do it. Overall, (debit card fees aside) we spent ~$400 USD on gas over an 11-12 day period, driving a fuel-efficient economy car. You can get more information from our Itinerary for Photographers and Explorers here.

Car rental

In Iceland, the longer you rent a car, the cheaper it gets. One or two-day rentals for an economy car priced out at $50-$80USD a day. But for our 12 day rental, our total was only $344 USD. That’s not bad. But a 4x4 higher-clearance vehicle can run as high as $140-$220 a day. We chose an economy car for this trip because we were primarily sticking to the paved highway 1/ Ring Road or packed-gravel side roads (which most cars can handle). So take a look at where you want to go. If you only need a 4x4 for part of the trip? Consider renting a smaller, more fuel-efficient car and hiring a local guide for those few times you need to go off road. When compared, it may cost you less overall. And you will gain the benefit of a local's expertise as well as contribute to his or her source of income.


Food

This is an area that many tourists will consider expensive. Main dishes run the equivalent of ~$30USD a piece, a cheeseburger with fries ~$18-$20 USD, and a pizza ~ $30+USD. In general, if two people sit down for dinner and order two entrees, share an appetizer and order one dessert, you will probably drop ~ $100 USD per meal. This is without alcohol. Now, after you finishing wincing, let me present a few considerations. This price includes tax and tip. So in other words, this the equivalent of about an $80USD meal for two people, before tax and 20% tip. Feel any better?

Also, remember that time you ate in Maui or in San Francisco? Or at that Vegas restaurant? Those entrees probably were $30+ each as well. Granted, the fact that a pizza or a burger costs that much is harder to swallow (no pun intended) than paying $35 for an entrée. But on the flip side, you can also find some amazing Thai food in Iceland for only $15-$18 USD.

Alcohol

Hard alcohol is expensive. So if you are craving a martini, it will set you back ~ $20-$25 USD per drink. Ouch. Beer at a restaurant cost us about $11USD a pint and wine varied from $9-$14 USD a glass – which actually is about what we pay in the United States. Beer consumption has only been legal in Iceland since the 1980's. So maybe they are capitalizing on its recent popularity. Go here if you want to read my Review of the Beer Spa.


Lodging

As you read this, there is probably another Foss Hotel being built. This rapidly growing chain offers a wide variety of room prices depending on location. This sudden infusion of infrastructure can be viewed as both a solution and a problem for the Icelandic accommodation shortage. It’s a benefit, as there is barely enough accommodation to house the growing number of tourists who arrive daily. It’s viewed as a detriment by some locals who are trying to make a living renting out rooms or running quaint bed and breakfast establishments from their property. But overall, there are more and more choices out there, so prices may go down over time.

We spent on average $110- $150USD a night at Farm Stays, AirBnB's or Bed and Breakfasts and ~$350+ USD a night for an upscale hotel room. To me, it was the middle range hotel rooms that seemed to have a distorted cost-value ratio. But overall, accommodation prices were not out of line with what I was expecting. However, if you are a budget traveler, this may be more than you want to spend. There are many camping options and of course camper van/ RVs to rent. Look for an upcoming blog on how these compare to staying at a Farm Stay or Bed and Breakfast instead.

Click here for a list of more affordable hotels in Reykjavik

Click here for a list of more affordable hotels in Vik

Click here for a list of more affordable hotels in Myvatn


Geothermal spas

Again, this is relative to what is familiar to you. Some people won’t blink at paying $150 to get a one hour spa treatment or massage but feel that charging $40 to access to a beautiful outdoor soaking pool with showers, locker rooms, and steam rooms is too expensive. One could rationalize that a massage is an individual being paid for a one-on-one professional skill. And someone else could argue that a spa has to pay many more people to maintain the pools and showers, keep them clean and in working order, all while being at your beckon call while you soak. So, there you go, more examples of different perspectives.

Now, on this topic I do feel that at some spas in Iceland, the cost-to-experience value ratio is a bit high. You can read more about my Top 4 Geothermal Spas experiences here, their entrance fees, and decide for yourself. If you need to cut costs but still want to soak in those wonderful, Icelandic geothermal waters? There are many blogs out there that list all the free hot springs that you can hike to. They don’t have showers or service of course. But we went to a few of these as well, and they can be really fun.

Ways to save money in Iceland


Yes, it can be done. Here are my recommendations.

Food

1. Pick hotels, local lodges or Air BNB's that include breakfast in the overnight price. That's one meal covered every day.

2. Grocery shop for your road trip and ‘snack’ your lunch on the road. For some people, this may be a bit of a habit change. But we saved a lot of money doing this.

3. Don’t eat so much, or share meals. Ok, this may seem obvious and I am not judging the big guys or teens who burn through some serious calories each day and are ravenous by the end of the day. But ask yourself: do I really need an appetizer every night at dinner? It’s a habit for me too. I go to a restaurant for dinner, I order an appetizer, get an entrée, then order a dessert. Do I do this at home? No. I make a one plate/dish meal and eat it. I rarely have an appetizer and I probably can stand to eat less dessert. So just think about it. Even alternating skipping dessert one night and then skipping the appetizer the next, or sharing plates can help you save money. And you just may drop a few unwanted pounds as well.

Alcohol

1. Lay off hard booze for a few weeks. It won't kill ya.

2. If you must have it, get your hard alcohol at the Duty free shop in the airport and bring it in. I saw people dong this, and it must be cheaper given the price of cocktails at bars and restaurants.

3. Find a Vinbudin wine/beer store and buy a few bottles of wine or beer for the road. This will definitely save you money over buying individual glasses in a bar or restaurant. Local beers and European wines had the best prices (as they are imported from closer countries). TIP: Check hours of operation at each location. Some are only open a few days a week and sometimes only for a few hours.


Lodging

1. Rent a room at a Horse Farm or stay in Air BNB rooms. This is a great way to help the Icelandic community, support the locals and get to know the people that work to keep the Icelandic culture alive. You can read more about the cool places we found in here in our full 11 day Iceland Itinerary

Other

1. Get a good price on your airfare. I know that airfare is highly variable from day of week to month of year. But as you are researching fares and schedules, check to see if an airline has a stopover plan. I've done this twice and have been able to get a better fare traveling to Paris or Amsterdam with a 2 week stopover in Iceland, than going there directly. Besides you get to travel to two countries instead of one!

2. Make sure you get that pin for your credit card so you won't have to pay international debit card fees!

3. Bring your own re-useable water bottle – Icelandic water is so pure and delicious, you never have to buy it bottled! Just refill it out of the tap anywhere you can. We love the Swell brand water bottles and don't travel anywhere without them. They keep water cold for so long and we love all the funky designs. Check them out here. They are one of my favorite travel accessories.

It balances out over a lifetime of travel

In summary, I look at the cost to travel in Iceland in this way. There are places in the world that my currency (USD) doesn’t go very far. Therefore it’s expensive for me to visit. But there are also places I have traveled to, where my countries currency is strong and I benefit greatly. Countries like South Africa, Thailand, Morocco, Costa Rica and Mexico? I have come away with a 'bargain' travel experience. Other places like Hong Kong, Australia, Sweden, Denmark and Norway have, or will cost me, a lot more. But over a lifetime of travel, I feel it will balance itself out: sometimes I gain, sometimes I lose. But overall , if I budget and plan well, I will be fortunate enough to see a variety of really amazing places, at moderate prices.

Hope this was helpful. Have fun!

If interested, you can read more of my recommendations on What to Pack for Iceland here.


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