How to survive expensive Iceland without going bankrupt

Myvatn Air Iceland (6)

There’s been a lot of talk lately about how expensive Iceland is and some of the people that have talked the most about it are people that work in the Icelandic travel industry. Exclamations like: Three star hotel in Iceland more expensive than 5 star hotel in New York and Poor value for money – boo Iceland have been swimming around the interwebs lately leaving me wondering whether this is in fact true. Although I’m not going to argue that Iceland is a cheap destination there are always two sides to every story.

Comparing a hotel in New York and a hotel in the Icelandic country side is first of all like comparing apples and oranges. I’m pretty sure the hotelier in New York doesn’t have to drive tens or hundreds of kilometers for groceries for example (plus the de facto monopoly on groceries in Iceland or at the very least oligopoly) and somehow I suspect that labor costs are probably higher in Iceland too. I’m not saying that the hotelier in New York hasn’t got their own set of problems, I’m just saying that in my opinion these things are not comparable.

You also have to take into consideration the state of the currency, the fact that we import pretty much everything (and how that relates to the state of the currency), import duties, the aforementioned oligopoly and the fact that Icelandic consumers are super lazy and never protest against high prices no matter how unfair they think they are. At least not in public, there’s a lot or mumble and grumble in private though. So although you may sometimes feel cheated because of high prices there can be reasonable explanations for it. Can be – sometimes people are just charging obscene amount of money because they can and they care more about getting rich than the service part of tourism or giving their guests value for money.

Also, if you compare prices in Iceland to many countries around us (Western European countries with a high standard of living and even the US) you’ll probably discover that Iceland, in general, is not that expensive. When I was in the US in February for example I was surprised how expensive it was to eat out. The prices of the food were maybe lower in some cases but with the added tipping (something you don’t have to worry about in Iceland) the prices often came to about the same or even more than what I would pay at home. Other things were of course a lot less expensive (hello three pairs of Converse for the price of one!) but food, accommodation and drinks were similar.

So what can you do to make sure your vacation in Iceland is just the “oh they have to import everything” normally costly and not “oh my god they are robbing me blind” expensive?

Do your research

Don’t just jump at the first thing you see. I’ve seen car rental agencies offer vastly different prices for the same car depending on how or where you book it. Sometimes it’s more expensive to book things through booking.com (because of the commission rates) than booking things directly with the hotel. Don’t dismiss hostels because you think you’ll have to share rooms with 30 other people (most of them offer really nice two-bed rooms, often ensuite). Often you’ll find good deals and offers – like by downloading the Appy hour app or like the awesome MAR offer I sent out with my  newsletter recently. I know there’s also the question of your time being money and maybe it will cost more of your time to do research than what you save in krónur but why book a rental car for 20.000 ISK a day when you can get it for 7000 ISK a day?

Do like the locals do

Walk the extra few meters to go to Bónus in Hallveigarstígur rather than buying obscenely expensive stuff at the 10/11 store in Austurstræti. We do most of our serious shopping in the low-cost stores because we know it’s worth it. Ask a local whether they can recommend any good places with good offers on food. Eat at nice restaurants at lunch instead of in the evening (usually only applicable in the weekdays). Pick up your beer in the duty free on your way into the country instead of buying it in Vínbúðin. Go to one of the many amazing geothermal pools around Reykjavík and skip the Blue Lagoon.

Save money by drinking the tap water

I’ve mentioned this before and I will probably mention it again, there’s no reason to buy water in Iceland because the tap water is perfectly safe to drink and also very good. Spend your money on some good wine instead.

Use public transport

I know I’ve not been a big advocate for the public transportation system on this blog but if you are just going from A to B you don’t necessarily need to hire a car for that. Strætó, the city bus here in Reykjavík has recently expanded to the whole country and it’s not that terribly expensive. It may not be the best thing for road trips but if you are planning a solo trip  to Akureyri for example you’ll save a lot taking the bus compared to hiring a car. The bus to Akureyri is 7.700 ISK and they offer comfortable seats and free wifi. Worth looking into.

Alternatively you can also use ride share services like Samferda.net to find someone who’s going where you’re going.

Follow your intuition

The final piece of advice I’m going to give you is just to follow your gut feeling and use common sense. You can sometimes just feel it when someone is taking you for a ride and if that ever comes up just ask someone for a second opinion. There are countless forums where you can ask for advice or answers like the Lonely Planet’s Thorntree forum or the Tripadvisor forums where people will gladly help you figure out whatever you are wondering about. If paying an obscene amount of money for something seems unreasonable then just shop around and see what things cost elsewhere. Don’t just open up your wallet without thinking about it.

I’m not going to tell you to send your questions to me via e-mail because I’m so ridiculously busy that sometimes questions like that get buried underneath everything else I have to do but my followers on Facebook are often quite helpful if you post questions there. They usually answer them before I even have the chance to look at them.

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13 thoughts on “How to survive expensive Iceland without going bankrupt

  1. Jan Z

    And don’t forget soup and bread! My husband and I were very pleasantly surprised by how often restaurants had an unlimited bread and soup option at either lunch or dinner. Soup was always good, bread almost always freshly made!

    Also, think about the things that are made or grown or raised in Iceland and go for them- they are often reasonably priced- examples include yogurt, lamb, hot dogs:), some cheeses, some veggies, and breads. Buy local when possible!

    Reply
  2. Heather Linnett

    Firstly I’m very bad at math :-) Seriously I do not find Iceland expensive at all. One should expect to have things different than at home. if that is a priority, then stay at home. You will be a happier maybe. After 4 tours and having travelled around 7000 kms, in around 50 days give or take, and planning my 5th, Iceland is not expensive to me. Currency rates play a part. So many always say use only credit cards in Iceland, everybody does, well I don’t agree about using credit cards/Debit cards. This question is on Trip Advisor all the time. It get ‘use the card’ . If only people would do their homework, and look at charges. I pay ridiculous charges to use my card anywhere in the world, but NONE at home, so that is the card for me. Then I pay currency exchange, + a charge to use the card, imposed from the bank, plus taxes. It comes out cheaper for me to use only cash, ONE charge to change and I do it in Iceland. As far as food is concerned eat what you want to pay for, don’t compare it is apples and oranges, and it only makes for unhappiness. Self cater look for these places, they are there. Even if they are not, and the hotel does not do that, then buy a loaf of bread , get some meat/cheese, fruit and vegies in a tub cooked and easy to use. Buy some paper plates if you want, take a knife from home, plastic forks. It is easy with a little thought. Eat dinner for lunch its cheaper, then make a snack in the hotel. There are ways. Now woollen products yes expensive but beautiful. Books cheaper, in Iceland. I could go on. Car rental hmmm so many say self drive, then get into trouble, go through a storm, gather damage then scream fraud when they are charged for the damage. Sometimes a private tour is the way to go. All we need to do is think, abou twhat we want to pay for. I say this with the best intentions hoping to help. If one goes on tour, and want to buy from the road places then expect to pay for the service, someone has to make the sandwich you buy there, so make your own. Drink the water, it is fresh, and cool, but not from all the rivers. The Glacial ones are not for drinking. Get it straight off a mountain stream. JUST ENJOY THIS WONDERFUL COUNTRY. it is magnificent.

    Reply
  3. Jackie

    Visiting off season can be a good way to save money. My husband and I went in January with a friend who had visited Iceland in the summer before. We were able to rent an apartment in January for less than the cost of a tiny hotel room he had booked in the summer. I will say that we are from a part of the US that gets hit by some pretty hard winters. Winter averages for our area are -12C, so we are used to cold weather. The 5-6 degrees C we experienced on our trip were mild by our standards.
    We also saved money by only renting a car for two days. Reykjavik was a very walkable city. There were paths along the main roads so we could walk to most of the places we wanted to see in the city.
    The community pools are great too. Way more fun than the Blue Lagoon, in my opinion, and a fraction of the cost.

    Reply
  4. Anne-Sophie GAUTRELET

    Thanks for all those pieces of advice !

    I’ve been twice to Iceland with my family and the best way to save money is to rent a summer house instead of going at the youth hostels. It’s far more convenient and it’s really cool to get icelandic neigbours to discuss with on a long summer night ! A location in Iceland costs the same price than a cottage on the french Atlantic coast.

    I confirm children do not see any differences between spas and pools as long as they have fun : swimming pools are really nice and cheap – and most of them have hot pots and sauna. No need to go to the wallet-killer Blue Lagoon (but it would be a shame to avoid Myvatn Nature Baths I think)

    About eating, get a hot dog at the N1 for lunch or buy food at the Bonus discount supermarkets. It’s better to “invest” your money in a reliable car….

    I spread the word on twitter. Thanks for your blog.

    Anne-Sophie from France, http://annesophiegautrelet.blogspot.fr/

    Reply
  5. Hann

    Whether you find Iceland or Reykjavik expensive depends a lot on where you come from in the first place. For example, Reykjavik doesn’t generally make it to the top ten most expensive cities on the world in most rankings. (Compare it to Paris, London, Tokyo, NYC, Hong Kong which generally are in the top 5). So as far as capitals go, Reykjavik is actually not too bad. If you come from the countryside in your country however, of course Reykjavik is not cheap.

    On the other hand, the quasi-monopoly of hotels in Reykjavik make staying in a hotel extremely expensive. I stayed in two different hotels in 2013 (both Fosshotel of course), and although the hotels are nice, they’re more like clean 2 stars hotels with 4 stars prices than the announced 3 stars.
    So as far as I’m concerned, coming from London, Reykjavik is reasonably “cheap” for most things except for hotels and maybe very touristy things like car rentals (which I didn’t book). But for example long term rents or property prices are very low compared to that of London or Paris (I would judge a fifth or sixth of the prices there).

    Reply
  6. Tammy

    Hey, you should add the ham or salami salad rolls from the bakari in Bergstradastaeti. We are staying down the road while my husband does some work here till next Jan. As a family of five we head out to the bakari, grab ready made rolls for 350kr, some massive choc chip cookies for 250kr (I think), our water bottles and do one of the walks/hikes out of town. Great value! I believe it’s one of the oldest businesses in Reykjavik.

    We have even bought a chook and cooked it in a hostel/guesthouse with an oven (in Husavik I believe). Cook in the evening, pop in fridge and pop it in your pack for pulling apart the next day…pretty cheap. My biggest problem feeding people on a budget is working out what things are….you know translation prob mostly. Oh, and in our first week here we totally followed your lunch recommendation for our main meal and still do when we have time off travelling. Iceland is a great experience but Kronurs don’t go far in feeding a family for a dinner in town very often, but lunch works well.

    Thanks for all the tips.
    Tx

    Reply
  7. Ger

    I don’t get what you all are trying to say.
    Iceland IS extremely expensive. No matter how beautiful it is.
    A 3 star hotel asking you €400 a day for a double room is simply ridiculous. No matter how much you would save buying soups or bread or swapping dinner with lunch or avoiding the blue logoon.
    That’s it. Just say it.

    Reply
    • Auður Post author

      I don’t agree with you – prices are relative and depend on where you come from. There are certain things that are very expensive in Iceland, other things are just average or even somewhat cheap.

      Reply
      • Ger

        And I don’t agree with you, still I am the tourist and you are the local, not sure who is more reliable here… :-)
        The overall cost of a trip is mainly done by three things: flights, accommodations and transportation.
        1. Flights to Iceland are not really cheap, they’re affordable if planned well in advance, still not cheap. I paid a bit less than £200 per person for a return flight from London, you see? Not like it’s for free.
        2. Car rental costs may really vary, I’ve just booked with a car rental company which I hope would have no bad surprises as it really sounds way cheaper than many others (including all the possible insurances), still it’s around €200 for 3 days, plus gasoline.
        3. Accommodations… well again, that’s the only thing I still haven’t been able to book cause I refuse to spend ridiculous prices for a 3-star-if-you-are-lucky hotel in Reykjavik (for something decent I’ve been asked up to €420 per night!) or around €120 per night with no breakfast in a place in the middle of nowhere (which I might like being far from the crowd) with a shared bathroom (which I won’t like as I prefer to socialise elsewhere).

        Now you can argue that I should not rent a car if I want to be in budget and that I can go search for a room in Airbnb, but that would not mean Iceland is not expensive, in fact it would mean that is so expensive I needed to find alternative ways of travelling.

        And again, I don’t know what are the cheap or average things you refer to (would be nice to know tho), but I’m afraid they won’t make any tangible difference on the overall budget. Especially cause I’m not expecting you telling me that these things are gasoline, meals, whale watching trips, northern lights excursions, blue lagoon entrances… Guess what? These are the things that tourists would do, not just spend a fortune in gallons of mineral water :-) (Thanks for the tip re tap water tho!)

        Don’t get me wrong, I’m really excited about my forthcoming short trip to Iceland, my eyes and my camera would love it I’m sure and I hope to make the most out of it. I am just saying that it all seem extremely pricey, whatever the reason is, no matter how much you or me are going to heart Iceland.

        Ah, and as per “it all is relative” comment, although I am not an Arab sheikh or a Russian oil dealer I live in London, which I’m sure you know is not listed amongst the cheapest places in the world.

        P.S. I love the guy saying he only pays cash… welcome to the XXI century :)

        Reply
          • Ger

            Totally.
            I hope you understand my point of view. As much as I’d love to do “local” things and feel like a “local”, I am not. I am a tourist, and I’m going to do touristy things, spending only a few days in your fantastic Country and trying to do and see as many things as possible. And all those touristy things come with a pricetag.
            Enough, I’ve been moaning far too much on your blog!

            P.S. I’ve just booooooked the accommodation, in the middle of nowhere, it looks fab, and I got a 3×2 offer which lowered the prices a tiny bit. Boom.

  8. Dave

    I’m visiting Reykjavik for the first time in February for 17 days, by myself. I’ve booked flights, accommodation
    and a 5 day tour with the Mountain Guides so far…and I’m quite impressed with the room price
    compared to here in Australia. $1500AUD for 17 days? You won’t get a caravan park in Perth for that, regardless of the time of year. My Reykjavik room will be an inner city guesthouse, own bathroom and breakfast included…what’s not to like about that, I say. It’s all relative.
    It probably says more about how expensive Australia is though.

    Reply

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