Iceland is famous for its stunning nature, waterfalls, glaciers and volcanic landscapes unlike anywhere else in the world. But it´s also known for something else: high prices. So is traveling in Iceland really that expensive? The truth is, it can be but it doesn´t have to be. With smart planning and a cheap rental car, you can explore Iceland at your own pace and save money along the way. From free natural attractions to budget-friendly road trip tips, this guide will show you how to make the most of your adventure without blowing your wallet.
✨Here are the best budget tips to help you plan your Iceland road trip.
Is Iceland Expensive? What You Should Expect to Pay
Yes, Iceland does have a reputation as an expensive country and many travelers are surprised by how quickly costs can add up. Still, with smart choices and a cheap rental car, you can keep your spening under contol
Everyday Costs in Iceland
To give you a clearer idea of costs, here´s a breakdown of what you can expect to pay in Iceland
| Category | Price in ISK | Price in USD | Notes |
| Coffee | 500-700 ISK | $3.70-$5.20 | What you can expect to pay for a basic cup |
| Gosoline | 285-321 ISK/litre | $2.30-$2.60 | Driving costs are part of traveling in an expensive country |
| Takeaway meal | 2,000-3,500 ISK | $15-$25 | A budget option compared to restaurants |
| Casual meal (per person) | 4,000-6,000 ISK | $30-$45 | Restaurant dining in an expensive country |
| Hostel (Reykjavík, dorm bed) | 5,000-7,000 ISK/night | $35-$50 | Cheapest accommodation |
| Cheap hotel (Reykjavík) | 8,200-16,500 ISK/night | $60-$120 | Budget accommodation |
| Mid-range hotel (Reykjavík) | 18,000-34,000 ISK/night | $130-$250 | Comfortable accommodation |
| Economy car (Firefly) | ≈ 5,500 ISK/day | From $40/day | Entry-level rental car option |
| Mid-size SUV (Firefly) | ≈ 8,900 ISK/day | From $65/day | Popular rental car choice for families |
| 4×4 for F-Roads (Firefly) | ≈ 11,600 ISK/day | From $85/day | Best rental car for the highlands |
What Makes Iceland Seem So Pricey?
High Import Costs and Small Population
Iceland is often called an expensive country and there are a few key reasons why. With a small population and limited local production, many goods, from food to clothing need to be imported, which raises prices. Add in Iceland´s geographic isolation and high transport costs and it´s easy to see why basics here aren´t cheap.
Seasonal Tourist Demand
Tourism also plays a big role. Seasonal demand, especially during the northern lights season in winter and along the Golden Circle area in summer, pushes accommodation and tour prices up. Travelers class to the same highlights, which means hotels, tours and even rental cars can cost more during peak times.
Everyday Costs: Food and Experiences
The cost of food is another factor. Eating at restaurants quickly adds up and while supermarkets are cheaper, they still carry higher prices than many travelers are used to. Visiting Iceland´s world-famous hot springs and the Blue Lagoon also comes at a premium. Though free natural baths do exist, the most popular sites charge entry fees that reflect their high demand.
Duty Free and Day trips
Even everyday items remind visitors they´re in an expensive destination. Buying snacks or alcohol outside of duty free can be an eye-opener, with prices much higher than at home. And while a day trip with a tour operator is convenient, it´s sometimes more costly than renting a car and exploring on your own.
Budget Travel Tips: How to Save Money in Iceland
Traveling in Iceland doesn´t have to drain your wallet. Here are some smart ways to cut costs while still enjoying the best of the country:
- Shop at grocery stores like Bónus, Krónan or Prís instead of eating out every meal.
- Cook in hostels or guesthouses that provide kitchen facilities to save on dining expenses.
- Take advantage of happy hours in Reykjavík and other towns for cheaper drinks.
- Choose free or low-cost hot springs such as Reykjadalur or Seljavallalaug
- Book affordable accommodation in Iceland, from hostels and guesthouses to budget hotels.
- Use duty free at the airport for alcohol and snacks before heading into the city.
- Rent from Firefly for a cheap rental car with unlimited mileage, the best way to explore on a budget.
- Explore free attractions like national parks, waterfalls and beaches, plus swimming pools that have very low entry fees like Sundhöll Reykjavíkur.
Best Free Things to Do in Iceland While Traveling on a Budget
| Activity | Location | Cost |
| Sun Voyager Sculpture | Reykjavík Waterfront | Free |
| Hallgrímskirkja Church (exterior & square) | Reykjavík city center | Free |
| Northern Lights | Visible across Iceland in winter | Free |
| Þingvellir National Park | Golden Circle | Free |
| Seljalandsfoss Waterfall | South Coast | Free |
Renting a Car in Iceland vs. Joining Tours: Which is Cheaper?
When planning your trip, one big decision is whether to rent a car or join guided tours. While tours are convenient they add up quickly especially if you want to see more than one region. A single day trip to the South Cost or Golden Circle can cost nearly as much as several days with a cheap rental car from Firefly. If you´re planning to explore beyond Reykjavík, renting a car almost always saves money in the long run.
Tip from Firefly🚗: With a rental car, you can also get something tours can´t offer: flexibility. You can time your visits to popular spots during off-peak hours, chase the northern lights when conditions look good, or pull over at hidden hot springs and viewpoints that tours skip. Whether you´re exploring the Ring Road or taking shorter drives from the capital, having your own car means you can set the pace, cut costs and see Iceland on your own terms.
How Much Should You Budget for a Trip to Iceland
The cost of traveling in Iceland depends on your travel style. Below are three sample budgets to help you understand what you can expect to spend on accommodation, food fuel, excursions and renting a car.
- Low-Budget Traveler (≈ 18,000-25,000 ISK / $130-$180 per day).
- Accommodation: Hostel dorm bed (≈ 5,000-7000 ISK / $35-$50 per night).
- Rental car🚗: Firefly economy car ( from 5,500 ISK / $40 per day).
- Fuel (≈2,500 ISK / 18$ per day).
- Food: Supermarket meals, cooking in hostels (≈ 4,000 ISK / 28$ per day).
- Excursions: Focus on free attractions, waterfalls, national parks and hot springs (1,000-2,000 ISK $7-14$ per day).
- ✨Ideal for backpackers who want to keep costs low while still renting a car for flexibility.
- Mid-Range Traveler (≈ 30,000-45,000 / $220-330 per day).
- Accommodation: Cheap hotel or guesthouse (≈ 8,200-16,500 ISK / $60-$120 per night).
- Rental car🚗: Firefly mid-size SUV ( from 8,900 / $65 per day).
- Fuel: ≈ 3,000-4000 ISK/ $21-$28 per day.
- Food Mix of supermarket meals and casual dining (≈ 8,000-10,000 ISK / $57-$71 per day).
- Excursions: One paid tour or activity every few days (≈ 5,000-8,000 ISK / $35-$57 per day).
- ✨This is the most common mid-range budget for couples or friends traveling in Iceland, balancing comfort with savings.
- Comfort-Seeking Couple (≈ 55,000-75,000 ISK / $400-$550 per day).
- Accommodation: Mis-range hotel or boutique stay (≈ 18,000-34,000 ISK / $130-$250 per night).
- Rental car🚗: Firefly comfortable 4×4 or SUV (from 11,600 ISK / $85 per day).
- Fuel: ≈ 4,000-5,000 ISK / $28-$36 per day.
- Food: Restaurant dining daily, with occasional fine dining (≈ 15,000-20,000 ISK / $107-$143 per day).
- Excursions: Multiple tours like ice caving, whale watching or snowmobiling (≈ 10,000-15,000 ISK / $71-$107 per day).
- ✨A great option for those who want to relax into their trip with higher-end accommodation in Iceland, plenty of excursions and a reliable 4×4 for the journey.
Is Iceland Worth the Price? (Spoiler: Yes!)
Many travellers wonder if Iceland´s high costs are justified and the answer is absolutely yes. This is a destination where every turn on the road feels like stepping into another world. Towering waterfalls, black sand beaches, steaming geothermal valleys and active volcanoes create landscapes you won´t find anywhere else on Earth. It´s not just another holiday it´s a once in-a-lifetime experience.
Best of all, most of Iceland´s natural attractions are free to visit. You don´t need tickets to stand in awe of Skógafoss waterfall, wander through Thingvellir National Park or watch geysers erupt in Haukadalur geothermal area. Your biggest investment will be getting around, which is why renting a car is the smartest way to explore at your own pace.
Tip from Firefly🚗: Want to experience all this without overspending? Check out Firefly´s affordable car rental options and make your Iceland adventure both unforgettable and budget-friendly.
Affordable Adventures in Iceland
Iceland has a reputation for being expensive, but with smart planning you can make your trip surprisingly affordable. Choosing the right time to visit, following local money-saving tips and picking the best car for your journey all help keep the costs under control while still giving you the full Iceland experience.
With the right rental car, you´ll have the freedom to explore waterfalls, volcanoes, glaciers and geothermal wonders at your own pace without relying on tours
Book your cheap rental car today with Firefly and start exploring Iceland in your own terms!
