Iceland Budget: How Much Does a Trip to Iceland Cost?

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Iceland is so expensive. You’ll hear those four words a lot while planning a trip to Iceland. But is it really true? How much does a trip to Iceland cost? How much should you set aside for your Iceland budget?

I asked all these questions myself and wanted to consolidate my Iceland budget into one post so you can easily plan your own trip. In this post, I’ll run through everything I spent for my trip with Iceland budget travel tips to go along with it.

How much does a trip to Iceland cost?

Iceland accommodation

What we spent – £556.47 for 7 nights in AirBnb studio, 2 people

There are many accommodation options in Iceland – hotels, guesthouses, hostels, AirBnbs. We chose to stay in a small AirBnb studio in Reykjavik but we were careful that our choice was a sustainable one. I’ve heard reports that AirBnbs in Reykjavik are driving rent prices up and driving locals out. So, if you do rent an AirBnb in Iceland, make sure you stay in someone’s actual home or an annexe/add-on to their property.

In our case, we stayed in this wonderful little converted garage in a very pretty neighbourhood. Our host, Olafur, was very friendly and helpful, providing us with lots of tips and advice. I totally recommend this property if you’re looking to stay outside of downtown Reykjavik in a quiet neighbourhood with private parking.

The average price for an AirBnb in Reykjavik, depending on the time of year you visit, is roughly between £30-40 per night for a private room in someone’s home, or £50-110 per night for the entire apartment/property depending on size, location and quality of the property. Of course, if you’re happy to share a dorm room with others, this is a lot cheaper at £14-30 per night.

Other options in Iceland include hostels, with dorm rooms from £18 per bed per night, guesthouses from £37 per night for a twin room or hotels from £60 per night for two people. Of course, prices will rise the closer you get to downtown Reykjavik, so you’d have to juggle budget with location and decide what’s important for you.

Iceland flights

What we spent: £41.48 per person, flight from London Gatwick to Keflavik Airport

This was most definitely the cheapest part of our Iceland budget and the thing that made us book in the first place. After seeing flights for £40, we couldn’t resist, even though we knew the rest of the trip would be fairly pricey.

I booked my flights through Skyscanner, but flew with budget airline, easyJet. We travelled with hand luggage only, which was no mean feat when you have to pack a million warm layers to keep warm in the Icelandic winter. Nevertheless, it meant we didn’t have to pay extra to take a suitcase. Hold luggage costs between £13-30 each way depending on your flight.

Check out my Iceland winter packing list.

Iceland car hire

What we spent: £218 for 4-wheel-drive, 2 people for 7 days, £150 fuel, £20 excess waiver insurance

If you’re visiting Iceland in winter, there’s no doubt about it, you need a 4-wheel-drive. I’ve spoken to friends who feel differently, but personally, when we were out in the middle of nowhere in a snowstorm, we were really grateful for our trusty Suzuki Jimny.

The cheapest car hire we found was with Nordic Car Rental which we booked through Northbound, for £218 – we booked a Suzuki Jimny, which is a small 4×4.

If you’re happy with a smaller car, such as a Fiat 500, you can get these for as low as £120 for 7 days when searching through Kayak. Or if you want a larger SUV 4×4, you’ll be paying upwards of £300 for 7 days. While it might seem expensive to opt for a large 4WD, you can’t put a price on safety!

Of course, with car hire comes fuel. We spent approximately £150 on fuel across the week, split between two people, but of course the cost of fuel is entirely dependent on the type of car you hire. We also opted for £20 excess waiver insurance with Reduce My Excess.

I’d also recommend hiring a car if you want the flexibility of planning your own day. I personally didn’t like the idea of being stuck on a coach tour with dozens of other people, while being taken to the typical tourist sites with no chance of stepping off the beaten path. Not to mention the additional cost.

On the other hand, we spoke to some people who’d been on tours themselves and they said the knowledge of the tour guide made the day very interesting, so it really depends on what you prefer. If you’d rather not drive yourself, or plan your own routes, booking a few Iceland day tours would suit you.

Iceland Tours

What we spent: £36.33 per person

Having said that, we did book one tour during out stay in Iceland. We were desperate to see the northern lights, as most people are when visiting Iceland in winter. But with this being our first time in Iceland, we didn’t know what to expect on the weather front or how easy it would be to spot the aurora ourselves, so we decided to book a northern lights tour with Get Your Guide. This particular tour offers free hot chocolate and pastries, which was a welcome treat while standing outside in the cold looking for the lights.

Having now done a northern lights tour in Iceland, I’d say, depending on weather conditions, it would be relatively easy to hunt the aurora borealis yourself in a hire car.

The tour we booked was slightly more expensive than others on getyourguide.com but I opted for a tour with great reviews. Prices for northern lights tours in Iceland start from £29. Please note, with the cheaper tours, you’ll likely be on a large coach with 50+ people. If you’d rather have a more intimate experience, you should opt for one of the ‘deluxe’ small-group tours, which range from £50-70. If you want to experience something a little different, you can even opt for a northern lights cruise tour.

Food and drink in Iceland

What we spent: £85 each eating out, i.e. lunch, coffee, dinner, £50 each food to go and groceries, £30 alcoholic drinks

Due to price of restaurant food, we decided to eat in most nights. We did eat out on a few occasions throughout the week though – three lunches, one dinner, one coffee and cake stop. We found buying our own groceries from supermarket, Bonus, was the most cost-effective method and we also picked up sandwiches and snacks at a fuel station most days which meant we didn’t need to stop for lunch.

We also avoided alcohol for the most part, as it is very expensive, only going out for cheap ‘happy hour’ cocktails on two occasions.

Geothermal spa

What we spent: £26 spa entrance per person

As we were on a tight budget, we decided to give the expensive Blue Lagoon a miss and paid a visit to the cheaper, more authentic Krauma spa instead. This spa is a little more off the beaten path and is about one hour’s drive from Reykjavik. We drove through a blizzard to get to Krauma and were surprised to see that our efforts were rewarded when we had the entire place to ourselves.

Other expenses

Gatwick airport parking: £26.21, between 2 people

Souvenirs/shopping: £20.00

Perlan Museum Entrance: £26.10

Summary

Total expenditure: £800

While £800 is a lot more than I’d usually spend on 7 days away, Iceland was totally worth every penny. Fortunately, the majority of ‘attractions’ in Iceland are free. The wonderful thing is you don’t have to pay an entrance fee to get into national parks or see waterfalls etc. If you’re happy to self-drive and self-cater, you’ll save a lot of money, but it all depends on what sort of trip you want.

Are you planning a trip to Iceland? What’s your Iceland budget? Let me know your travel saving tips in the comments.