How Expensive is Iceland? (2025 Prices & Budget Guide)

Accommodation

Accommodation costs in Iceland vary depending on location, season, and desired comfort level. During summer months (mid-June to August), prices can double, so timing makes a big difference.

Camping costs $10 to $ 20 per person per night. For longer trips, the Camping Card costs $187 and gives access to over 40 campsites for up to 28 nights between May and September.

Hostels are the next budget option, with dorm beds ranging from $40 to $ 60 per night. Private rooms in hostels cost $150-$ 200, but are still less expensive than hotels. Outside Reykjavik, budget hotels average $97 per night (rising to $180 in high season), with some options available under $100.

Mid-range travelers can expect to pay $150-200 per night for comfortable hotels or guesthouses. This is not cheap, but this type of accommodation generally offers good value and comfort. These typically include modern amenities, better locations, and sometimes a complimentary breakfast.

Luxury hotels average $250 per night. The few 5-star hotels in Iceland average $265 per night. These prices can rise to over $400 during the summer. You have incredible options, such as the Silica Hotel and the Retreat Hotel, both located at the Blue Lagoon, with prices exceeding $1000.

Reykjavik has the highest prices, while rural areas, such as the Westfjords, can be 20-30% cheaper. Booking 6-12 months ahead for summer visits helps secure both availability and better rates.

Supermarkets

Grocery shopping helps mitigate Iceland's high food prices. In 2025, Bónus still offers the lowest prices, followed by Krónan and then Nettó, with Hagkaup being the most expensive.

Here's what basic items cost at Bónus:

• Milk (1L): 198 ISK ($1.40)
• Pasta (500g): 135 ISK ($1)
• Rice (1kg): 200 ISK ($1.45)
• Apples (1kg): 255 ISK ($1.85)
• Cucumbers (1kg): 480 ISK ($3.45)

The same items at Nettó would cost 199 ISK, 155 ISK, 280 ISK, 660 ISK, and 510 ISK, respectively; a big difference for budget travelers.

Iceland's food prices are high due to its small market size, reliance on imports, and taxes on imported agricultural products. For the best savings, shop at Bónus (identified by its distinctive pink piggy bank logo) and look for their in-house brands. Bring a reusable bag to avoid bag fees, and opt for tap water instead of bottled drinks (the water here is fantastic).

A small grocery haul that covers multiple meals might cost around $15 per person, which is much cheaper than eating out for every meal. For longer trips, buying in bulk and focusing on local products can reduce costs even further.

Eating out & Alcohol

Dining in Iceland spans a wide price range, but even budget options aren't cheap by international standards. Here's what to expect for different budgets:

Budget dining: $10-30 per day

Iceland's most famous budget meal is the hot dog from stands like Bæjarins Beztu in Reykjavík, costing about 820 ISK ($6). These aren't typical hot dogs; they’re healthier than most and super delicious (like most).

Other affordable options include:

• Shawarma or kebab wraps: 1,590-2,090 ISK ($11-15)
• Subway sandwiches: 1,529 ISK ($11) for a 6-inch
• Gas station food: 1,500-2,500 ISK ($11-18) for burgers or pizza
• Bakery items: 590 ISK ($4) for a cinnamon "snúður"
• Pre-made sandwiches from grocery stores: 799 ISK ($5.80)

Mid-range dining: $30-100 per day

A casual restaurant meal costs more:

• Breakfast at a café: 2,000-3,500 ISK ($14-25)
• Lunch: 2,000-3,500 ISK ($14-25) for burgers or sandwiches
• Dinner: 4,000-8,000 ISK ($29-58) for main courses with meat or fish
• Lunch specials at places like Snaps Bistro: 5,490 ISK ($39)

Luxury dining: $100-300+ per day

Fine dining in Iceland has premium prices:

• Two-course lunch at Apótek: 7,990 ISK ($57)
• Three-course lunch: 8,990 ISK ($64)
• Main courses at high-end restaurants like Grillmarkaðurinn: 6,990-9,690 ISK ($50-69)
• Three-course meal for two with non-alcoholic drinks: $150-162

Alcohol

Alcohol prices in Iceland are high due to heavy taxation. You have three options for purchasing:

Vínbúðin (state-run liquor stores): The only legal retailers for alcohol above 2.25% ABV outside of bars and restaurants. Prices as of 2025:

Bars and restaurants: Much higher prices:

Duty-free at Keflavík Airport: Your best option, with prices 30-50% lower than Vínbúðin. You're allowed six units of alcohol tax-free (e.g., 1L of spirits, 1L of wine, and a 6-pack of beer).

Many Reykjavík bars offer happy hours (typically 3-6 PM) with beers around 1,000 ISK ($7). Download the "Appy Hour" app to see the best deals.

Transportation (cars, campers, and buses)

Getting around Iceland is essential for seeing its natural wonders, and transportation will be one of your biggest expenses.

Rental Cars

Renting a car gives you the freedom you need to explore Iceland’s vast nature. Prices vary by vehicle type and season:

• Small cars (e.g., Hyundai i10): $53-61 per day
• Family cars (e.g., Dacia Jogger): $59-77 per day
• Mid-sized SUVs (e.g., Dacia Duster): $63-104 per day
• Large SUVs (e.g., Nissan X-Trail): $122+ per day

All rentals typically include unlimited mileage and basic insurance. Drivers must be at least 20 years old for 2WD cars and 23 years old for larger 4WD vehicles.

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Camper Rentals

For a bigger adventure, renting a camper gives even more freedom than renting a car, and the country is full of amazing campsites. Prices are higher, but you save tons on accommodation.

• Compact campers (sleeping 2): $90-94 per day
• Medium campers (sleeping 3): $163-179 per day
• 4x4 campers: $123-256 per day
• Luxury 4x4 campers: $291-419 per day

Campers include extras like insurance, fuel discounts, and road assistance, making them cost-effective for longer trips.

Public Transportation

Public buses connect major cities, but they aren't particularly convenient for exploring remote areas. Here are some sample one-way fares:

• Reykjavík to Akureyri: 13,200 ISK ($95)
• Reykjavík to Keflavík Airport: 2,400 ISK ($17)
• Reykjavík to Vík: 9,000-12,000 ISK ($65-86)

Gas prices

Fuel in Iceland is among the most expensive in the world. As of July 2025:

• Gasoline: 304.72 ISK per liter ($2.48, or about $9.38 per gallon)
• Diesel: 319.67 ISK per liter ($2.60, or about $9.84 per gallon)

For context, these prices are about 180-200% of the world average. For a typical Ring Road trip covering about 1,800 km (with detours to popular attractions), expect to spend:

• Small car: $199-223 total
• Compact SUV (gasoline): $259-290 total
• Compact SUV (diesel): $221-257 total
• Large 4x4 SUV (gasoline): $358-402 total
• Large 4x4 SUV (diesel): $301-351 total

Budget stations like Orkan and Costco (with membership) offer slightly lower prices. Plan your routes carefully to minimize backtracking and always fill up when you see a station in remote areas.

Natural Attractions

Here's some good news: most of Iceland's natural attractions are completely free to visit. Waterfalls, volcanic landscapes, black sand beaches, glaciers, and national parks typically have no entrance fees. The only cost is usually parking, which ranges from 500-1,200 ISK ($3.60-8.60) per vehicle and visit.

However, the famous geothermal spas do charge entry fees:

Blue Lagoon (near Keflavík Airport):

• Comfort Package: $76-110 (includes entrance, silica mud mask, one drink, and towel)
• Premium Package: $100-140 (adds a second mask, bathrobe, slippers, and extra drink)
• Retreat Spa: $400-500 (five-hour luxury experience)

Sky Lagoon (near Reykjavík):

• Pure Lite Package: $50-70 (entrance and towel only)
• Pure Package: $70-100 (includes seven-step ritual and towel)
• Sky Package: $100-150 (adds private changing facilities and a drink)

More affordable hot spring options include:

• Secret Lagoon (Flúðir): $25-30
• Laugarvatn Fontana: $30-40
• Mývatn Nature Baths: $35-50

Many local swimming pools (every city and town has one) cost just $8-12 and offer hot tubs. In contrast, natural hot springs such as Seljavallalaug, Landmannalaugar, or the Reykjadalur hot river are 100% free and feel more special and authentic than the touristy options.

Tours & Activities

For those not renting a vehicle or simply seeking the knowledge that comes with a guide, Iceland offers excellent and insightful tours. Activities such as whale-watching or glacier hiking, although expensive, are must-dos.

Northern Lights Private Tours:

• $400-800 for 3-5 hours (for groups of 2-6 people)
• Includes guide, transportation, and hot cocoa

Golden Circle Photo Tours:

• $150-300 for 6-8 hours
• Professional photography guidance and less-crowded spots

Glacier Hiking Tours (Sólheimajökull):

• $100-120 for 3-4 hours
• Includes safety gear and expert guides

Whale Watching Tours:

• Reykjavík: $80-100 for adults, $40-50 for children (7-15)
• Húsavík: $90-120 for adults, $45-60 for children

Jökulsárlón Glacier Lagoon:

• Amphibian Boat Tour (30 minutes): $49 for adults, $25 for children
• Zodiac Boat Tour (60 minutes): $80-100 for adults
• Day Tour from Reykjavík (14-15 hours): $150-200

Puffin Tours (Westman Islands):

• $80-150 for 1-2 hours
• Best during May-August nesting season

Reykjavík Street Art Tours:

• $30-60 for 1.5-2 hours
• Led by local artists

Tours often bundle multiple attractions, potentially saving money compared to visiting each attraction individually and covering transportation costs. For multi-day tours exploring areas such as the South Coast or Ring Road, prices range from $500 to $1,200, depending on the duration and what’s included.

Real Estate & Rent

The housing and rental market is a key indicator of a country's overall cost of living, and being familiar with it is vital for those planning to move to Iceland permanently. As you probably guessed, the market in Iceland is not cheap either.

Rental prices vary significantly by location:

• Reykjavík: 160,000-260,000 ISK ($1,150-1,870) monthly for a studio or 1-bedroom
• Larger towns like Akureyri: 130,000-210,000 ISK ($935-1,510) monthly
• Rural areas: 90,000-160,000 ISK ($647-1,150) monthly

Additional costs include utilities (10,000-25,000 ISK, approximately $72-$180 per month), internet (5,000-15,000 ISK, approximately $36-$108), and security deposits (typically 1-3 months' rent).

For property buyers, prices per square meter as of 2025:

• Reykjavík city center: 929,200 ISK ($7,615)
• Outside the center: 790,000 ISK ($6,475)

This means a typical 60-square-meter apartment would cost around 55,752,000 ISK ($456,700) in central Reykjavík or 47,400,000 ISK ($388,300) outside the center.

Energy

This is where Iceland shines. Iceland's abundant renewable energy (hydropower and geothermal) keeps electricity costs relatively low compared to other expenses. Based on the most recent data available, residential electricity costs approximately 23.263 ISK per kWh ($0.19).

This is significantly lower than the European Union average of about $0.31 per kWh, reflecting Iceland's renewable advantage. Approximately 90% of Icelandic homes utilize geothermal heating, which results in lower energy costs compared to other countries in cold climates.

The average electricity bill for a typical house is approximately 4,280 ISK ($35) per month, excluding distribution costs that vary by municipality.

Why is Iceland so expensive?

Several factors contribute to Iceland's high prices:

1. Geographic isolation: As a remote island nation, Iceland imports many goods, which adds to shipping costs and taxes.
2. Small market: With just 380,000 people, Iceland lacks economies of scale, raising costs.
3. High taxes: Iceland funds its social services through steep taxes, including a 25.5% VAT on most goods and services.
4. Climate and geography: Harsh conditions increase construction, maintenance, and farming costs.
5. Labor costs: Strong unions and worker protections ensure high wages, which businesses pass to consumers.
6. Limited agriculture: Iceland's volcanic soil and short growing season result in most food being imported, which adds to costs.
7. Exchange rate fluctuations: The Icelandic króna's volatility can impact prices for visitors.
8. Tourism boom: Increased demand has driven up prices, especially in popular areas.
9. High standard of living: Iceland consistently ranks among the world's best places to live, with services and infrastructure that come at a price.

These factors combine to create one of Europe's most expensive destinations, though many travelers find the unique landscapes and experiences worth the cost.

Are there ways to reduce expenses while traveling in Iceland?

• Visit during shoulder or off-season (May, September, or winter)
• Book accommodation 6-12 months in advance
• Buy alcohol at the duty-free upon arrival
• Shop at budget supermarkets like Bónus
• Prepare your own meals when possible
• Fill water bottles from the tap (Iceland's water is excellent)
• Look for happy hour deals at bars
• Consider camping or hostels instead of hotels
• Join free walking tours in Reykjavik
• Focus on free natural attractions rather than paid tours

Conclusion

Iceland is simply one of the most expensive places you can visit. Even if you're careful with money, you'll spend at least $150 daily as a budget traveler. That's just how it is. The high costs come from Iceland being a small, remote island with harsh weather and limited resources. Most visitors find that seeing the waterfalls, hot springs, and Northern Lights makes the expense worthwhile, but it's good to know what you're getting into before you go.

Frequently Asked Questions About Iceland Prices