Updated: Jul 12, 2020
Iceland is well known to be a bit of a pricey travel destination in some respects. However don’t let this put you off. You can still enjoy a budget friendly trip in this beautiful country. It might not be the best destination for a shoestring backpacker. But there are many ways and means to save some money on a tour of Iceland. In this article we will share our very best money saving tips with you. Covering everything from moving around to eating and drinking and seeing the incredible sights at their best.
Just how expensive is Iceland?
If you are used to eating out in cities like London or New York then you won’t be too shocked. Things like coffees, snacks and meals out are all comparable in price. However what might come as quite a surprise is the cost of a simple beer in Iceland. When you step into a bar in Iceland you might need to brace yourself. Expect drinks prices to be not far off double what you are used to paying.
The same goes for when you are buying alcohol in one of the government-run shops. Prices are still quite high. And once more the only place that you can buy alcohol retail in Iceland is in these very shops.
Heading into a supermarket or corner store you will find that groceries are a shade higher priced too. Basics like eggs, bread and vegetables will all cost a little more than you are used to. Accommodation and guided tour and activity prices are also on the high side. All this means is that you should work out your budget thoroughly before you visit Iceland. As long as you plan in advance you should be able to work within the parameters of your bank balance.
Why is Iceland expensive?
Well there are a few factors at play here. Firstly Iceland is a very remote island perched high up in the North Atlantic just shy of the Arctic Circle. This means that shipping goods all the way here carries an extra cost. Another factor is the range of goods that need to be shipped in. Much of the country is left wild and uncultivated and the climate is quite challenging for growing produce. This means that lots of fresh food needs to shipped in.
Then there’s the factor of a small population with high living costs. This means that as well as goods labour is also quite costly. Many Icelandic people have several different jobs in order to get everything done. In the busy summer months there are lot of workers from overseas helping to run the restaurants and hotels. All of these factors combine to push up the prices.
Fear not! Here come the money saving tips!
When to visit Iceland on a budget
The high season in Iceland runs from June to August. This is he height of the summer and the most popular time to visit. The weather is at its best and the Midnight Sun shines late into the night. As such the price of accommodation and vehicle rental are a little higher.
If you would like that summer experience in Iceland but on a budget then consider the shoulder seasons. These are the months either side of the summer. So we are talking late May and September. Oftentimes the weather can still be quite summery at these times. Of course the weather in Iceland doesn’t come with a guarantee. But the days will still be long and the pricing significantly lower in the shoulder seasons.
Visiting Iceland in winter is another wonderful option. But you will need to balance out what you want from your trip and the differing costs. There are fewer daylight hours in winter for sightseeing. And winter activities can quite often ramp up the cost of your trip.
Things like skiing, ice caving or glacier hiking will tempt you and are just too much fun to pass up! And then of course you might get to see the Northern Lights. If you would like to visit in winter then consider a shorter trip. Perhaps a weekend city break to Reykjavik with a few extra days for a short road trip.
Where to stay and how to travel in Iceland
The best piece of money-saving advice we have for you is to rent a campervan for your trip. Rental cars are all very well but you still need to pay for your accommodation. Unless that is you opt for tent camping. This is a viable option but only in summer and if you are a hardened camper. The weather in Iceland can sometimes be quite challenging for tent camping. Wind and rain can and do make themselves known.
Hiring a campervan gives you the freedom of camping with the extra security of a roof over your head. You will have the opportunity to cook and sleep in nature but can also retreat when the weather kicks in. Campervans and motorhomes come equipped with kitchen gear so you will have somewhere to sleep and to cook. Both of which can save you a significant amount of money. Motorhomes even come equipped with bathrooms and dining areas. This means that you can be almost entirely self-contained.
Budget tips for eating in Iceland
One of the best ways to save money on eating in Iceland is to hire a motorhome. You can also cook in a camper van but with a motorhome you have a much more complete set up. As well as a stovetop and a fridge you’ll have storage and prep space. You will also have an indoor dining area with a comfortable table and chairs.
This means that a larger group will be able to cook and eat in comfort. If you are travelling as a family group with hungry mouths to feed this is definitely the way to go. We recommend stocking up on dried goods and staples in the bigger supermarkets in Reykjavik and the larger towns. Small village shops and convenience stores are fine for a top up along the way. But prices are more economical in the larger supermarkets. If you want to buy souvenirs, we recommend you the main street Laugavegur in Reykjavik.
Another good tip is to bring some of your favourite snacks from home. Packs of snack bars, favourite biscuits and energy boosting nuts can be easily tucked into your case. You might also like to bring a basic cooking kit of your favourite spices and herbs to save buying it all new in Iceland.
Drinking in Iceland
First off Iceland has some of the very best drinking water in the world. Forget buying mineral water. Iceland’s tap water is delicious and abundant and once more it’s completely free! Be sure to take refillable water bottles with you in your case so you can top up along the way. Iceland's campsites and gas station stops will all have places to fill your water bottles. So feel free to enjoy one of Iceland’s most bountiful natural assets.
So that has covered staying hydrated. But what about the other type of drinking? As mentioned already alcohol in Iceland is heavily taxed. This drives the price right up if you are buying drinks in the bars or in the government run shops.
With this in mind if you are fond of a tipple then make good use of duty free. Definitely stock up on a few bottles of your favourite wine or spirit. If you are hiring a motorhome you will also have somewhere to keep your beers chilled.
That’s not to say that you should avoid the bars and restaurants. Absolutely not! Eating and drinking out in Iceland is all part of the fun. There is an excellent nightlife and dining scene to enjoy and you absolutely should. But by cooking for yourselves sometimes you will be able to splash out on some special meals out.
When you do decide to hit the bars look out for happy hours. There are loads of happy hour offers in Reykjavik and you’ll have a great time searching them out. The other tip for a night out is to do as the locals do. Enjoy a pre-drink in your camper van before heading out for the evening.
Guided tours vs. self guided tours
Iceland’s many natural wonders are on the whole completely free to enjoy. The National Parks are open for all to explore as are Iceland's waterfalls and beauty spots. The great thing is that the majority of them can be easily explored independently. There’s really no need for a guided tour most of the time. The Golden Circle and Ring Road route are all best seen on a self-guided trip.
Of course there are some activities that really benefit from a guide. While others still that can only be done with an experienced guide. Many winter activities are a case in point. Along with experiences like whale watching or horse riding. But if you rent a car or a motorhome then you can very easily go in search of the Northern Lights or explore the national parks.
One more classic Iceland activity worth mentioning here is visiting natural hot springs. Although the famous Blue Lagoon is an incredible place to visit there are many more hot springs in Iceland. Many of these outdoor pools and geothermal rivers are completely free to visit. While others are a great deal more accessible in price than the Blue Lagoon.
So there you have it! Our guide on how to save money in Iceland. Whatever your budget we’re sure that you will be able to plan an itinerary to suit your group.