Iceland Budget: How Much Does a Week in Iceland Cost?

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Iceland is one of the most beautiful places I have ever visited. But let’s be honest, it has a reputation for being wildly expensive, and that can be enough to make any budget traveller discount it as a possible destination.

I know how tricky it can be to travel on a budget in this day and age, especially to a country like Iceland. And while Iceland is never going to be a cheap trip, here’s the good news: it is possible to experience Iceland without blowing your entire savings.

I’ve visited Iceland on a budget myself, and in this post, I’ll walk you through exactly how much a week in Iceland costs, plus the simple swaps and money-saving tips I used to keep my spending low.

Whether you’re planning to chase waterfalls, soak in hot springs, or hike through jaw-dropping landscapes, I’ll show you how to make it happen on a tight budget.

Let’s break it down, step by step.

Iceland Budget Breakdown

Accommodation in Iceland

The cost of accommodation varies depending on where you stay – downtown Reykjavik is more expensive than the outlying suburbs and rural areas. It also depends on the type of accommodation you choose. For this blog post, I’ll assume you’re basing yourself in Reykjavik and doing day trips from there.

Private rooms in hostels with a shared bathroom are your cheapest option. You can expect to pay between £500 and £600 for 7 nights in a private double or twin room in a hostel in Downtown Reykjavik.

If you’re travelling solo, a bed in a dormitory room is much cheaper, with prices as low as £200 for 7 nights.

I recommend the following hostels in Reykjavik:

Kex Hostel – dorm rooms for solo travellers from £195 for 7 nights, double room with shared bathroom from £590. This hostel is in a very central location and has a communal kitchen which is great when travelling on a budget as you don’t have to eat out every day.

Bus Hostel Reykjavik – solo travellers can book dorm rooms from £192 for 7 nights, or a double or twin room with shared bathroom from £563. This hostel has a shared kitchen, a coffee shop and is in a great location in downtown Reykjavik.

Total: £550 – 7 nights in a private double or twin hostel room with shared bathroom in Downtown Reykjavik

Flights to Iceland From the UK

This was most definitely the cheapest part of our Iceland budget and the thing that made us book in the first place. With flights as low as £47, I couldn’t resist booking a budget trip to Iceland, even though I knew the rest of the trip could be expensive.

I booked my flights through Skyscanner and flew with budget airline easyJet from London to Reykjavik.

I travelled with hand luggage, which wasn’t easy considering all the warm layers and waterproofs I needed to pack for the Icelandic winter. easyJet now charges to take a large cabin bag onboard, and I think it would be difficult to pack everything you need for a week in Iceland into a small cabin bag that fits under your seat, so you may have to pay extra for hand luggage.

easyJet’s website says that prices for a large cabin bag start from £5.99, but I’ve never seen the price this low. They usually sit around the £30-35 per flight range, so you could potentially be paying an extra £60-70 on top of your flight cost just to take hand luggage.

Total: £112 – £47 for flights from London to Reykjavik + £65 for a large cabin bag

Car Hire in Iceland

If you’re driving in Iceland in winter, you will need a 4-wheel drive. When we were out in the middle of the Icelandic countryside in a snowstorm, we were grateful that we paid extra for a 4-wheel drive. If you’re driving in the summer, you can get away with a smaller car that may save some money.

The cheapest car hire we found was with Nordic Car Rental – we booked a Suzuki Jimny, which is a small 4×4. I always use Rental Cars for car rentals. Searching in 2025, the cheapest car hire I could find for a 4wd for 7 days in January was £242.

Of course, you’ll also need to factor the cost of fuel and car insurance into your Iceland budget. Assuming you’ll be doing a lot of driving, leaving from Reykjavik each day, you should budget approximately £150 for fuel across the 7 days.

This is based on an estimation of driving 1000 km in 7 days, which I know seems a lot, but the mileage soon racks up when you drive to tourist hot spots such as the Golden Circle and tourist spots on the South Coast of Iceland, such as Skogafoss Waterfalls.

One of my favourite budget tips for saving money on rental cars is to purchase your own Excess Waiver Insurance in advance, rather than opting for the expensive insurance sold by the car hire company. I always use Reduce My Excess, and have had fantastic service from them in the past when I had to make a claim.

Total: £414 – £242 for rental of a 4-wheel drive, £150 for fuel, £22.00 for Excess Waiver Insurance

Alternative to Driving: Book Day Tours

I’d personally recommend hiring a car as it gives you much more flexibility to go at your own pace and get off the beaten track while exploring the best attractions in Iceland.

On the other hand, if you’re worried about driving abroad, booking a few day tours might be better for you. You’ll also benefit from the knowledge of the tour guide, and if you’re travelling to Iceland solo, you’ll be able to meet other travellers.

We booked a Northern Lights tour as we were worried about driving at night and also felt we’d have a better chance of seeing the Northern Lights if we joined a tour with experienced guides.

Here are some I recommend:

Full day tour of the Golden Circle – including Kerid Crater, Gullfoss Waterfall, Geysir and Thingvellir National Park.

Day tour to the South of Iceland – including Skógafoss, Sólheimajökull, Vik, Reynisfjara Beach and Seljalandsfoss.

Snæfellsnes Peninsula Full-Day Tour – A bus day trip from Reykjavik to the Snæfellsnes Peninsula. Includes the Kirkjufell mountain, Vatnaleið, Djúpalónssandur beach, Londrangar, Arnarstapi and Ytri Tunga.

Total – £250 for 3 full-day trips linked above

Food and Drink in Iceland

During my week in Iceland, I spent £85 eating out, £50 on groceries, and approximately £30 on alcoholic drinks.

Due to the cost of eating out in restaurants, I ate in most nights as I had self-catering facilities. But if you’re staying in a hostel, this might not be an option unless they have a shared kitchen you can use, so check this when booking.

I did eat out on a few occasions throughout the week, which included three lunches, one dinner, and one coffee and cake stop. I found buying groceries from the supermarket was the most cost-effective method, and I also picked up sandwiches and snacks at a fuel station most days, which meant I didn’t need to stop for lunch in a cafe or restaurant.

Alcohol is expensive in Iceland, with a beer costing from £7 upwards and a glass of wine in a restaurant costing £10 plus.

Total – £200-500 – This can vary wildly depending on how often you eat out and where you eat and drink.

If you eat out every day for breakfast, lunch and dinner, without any alcohol, you can expect to spend in the region of £500+. If you’re staying in self-catering accommodation, and only eat out a couple of times in the week, cooking at your accommodation for the rest of the week, I would budget £200.

Geothermal Spa Tickets

Most tourists head to the Blue Lagoon with ticket prices starting from £75 per person for the cheapest package.

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, which costs from £43 per person. This spa is a little more off the beaten path and is about an hour’s drive from Reykjavik.

We were visiting Iceland in winter, and 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.

Total – £43-75, depending on which spa you visit

Other Expenses

Perlan Museum Entrance: £35.00

Gatwick airport parking: £50 approximately for 7 days

Summary

Total expenditure: £1400-1800

While £1400 is more than I’d usually spend on a 7-day trip, Iceland provides excellent value for money with incredible otherworldly landscapes and experiences you can’t get anywhere else.

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, hike to natural springs or see waterfalls. If you’re happy to self-drive and stay in a private room in a hostel, you’ll save a lot of money, but it all depends on what sort of trip you want.