Any traveler who comes to visit our fair shores will have many surprises awaiting them. There are, of course, the glorious landscapes, breathtaking waterfalls, and mammoth glaciers. Something they might not be expecting, however, is sticker shock. If you’ve done any research, you’ve probably started to ask yourself “Just how expensive is Iceland?”. Or “Why is Iceland so expensive?”.
These are valid questions that we will dive into in-depth. We’ll also discuss some ways in which you can save money during your trip. With prices comparable to New York City or London, every single krona counts when you visit Iceland.
Is Iceland Expensive?
So is Iceland expensive to visit? In a word, yes. I think it’s best to just be honest at the beginning and put it right out there. Iceland is currently the fourth most expensive country in the world. Bermuda, Switzerland, and Hong Kong take the top honors with first, second, and third places respectively.
If you’d like to have a better idea, many studies compare how expensive is Iceland compared to the US. More specifically, it’s cultural capital New York City. If you’ve ever been to New York you’ll find it to be about the same. Rent prices, food prices, and the price of drinks in bars are around the same as New York. Some might even be higher in Iceland.
So Why is Iceland So Expensive?
You probably find yourself wondering why costs in Iceland are so high. Well, for starters, geography plays a huge role. The fact that we’re a tiny island in the North Atlantic is a major factor. Not only are we far away from everything, but our climate is quite harsh.
It’s difficult to grow things here. So while we’ve got an abundance of fish and plenty of livestock, fruits and vegetables are harder to come by. This means that many of the products you see in the grocery store are imported. And of course, this costs money. So prices are passed on to the consumer.
Another answer to why is Iceland so expensive are the taxes on alcohol. This may come as a surprise, but booze is one of the things taxed most heavily in Iceland. Alcohol taxes in Iceland, which include both the VAT and the Alcohol Tax, can easily eat up 80-90% of the cost of your drink.
For example, a liter of Finlandia vodka costs around $20 in the US or 40€ in Europe. In Iceland, it’s closer to 62€ or $66. Yikes! Unless you’re planning on breaking the bank, you really have to plan your alcohol consumption carefully in Iceland. Luckily we’ve provides some tips below.
Iceland Travel Expenses and Costs
Let’s get right down to the nitty-gritty. In answering the question of how expensive is Iceland, we need to look at certain items. The cost of these goods will directly affect your road trip. And they will certainly give you a better idea of the baseline for prices on our lovely but pricey Nordic Island.
Is Iceland Expensive to Eat Out?
Restaurants in Iceland are a must-do during your trip. You’ll want to sample delicacies like Arctic Char, lamb stew, and our special charcoal bread. We’ve got plenty of fine dining establishments like Dill Restaurant, Kol Restaurant, or Kopar in downtown Reykjavik.
A typical menu at Dill will run you 13.900 ISK ($110 or 99€). Throw in a wine pairing and it’s another 11.900 ISK ($94 or 85€). Keep in mind that this is a Michelin-starred restaurant. But dining at other restaurants will only cost a few thousand krona less. If you only order a main dish at Kopar, for example, it’s still close to 5.000 ISK ($40 or 36€). It’s definitely not cheap to eat out in Iceland!
There are, of course, cheaper places to eat in Reykjavik. Hlemmur Food Hall is a great place to stop, as are bakeries and small cafés.
Gas Prices in Iceland
Along with food, gasoline and diesel when you rent a car will be a significant part of your vacation budget. Car rentals are one of the most popular ways to see the island. They’re the best way to do day tours to free activities like hot springs or Thingvellir National Park along the Golden Circle route.
The price of gas on Iceland usually fluctuates around 230-240 krona (1,72€) per liter. For our American friends who are used to gallons, this is roughly $7 per gallon. To figure out how much gas you’ll need, plot your route and guesstimate based on the fuel efficiency of your vehicle.
Saving Money in Iceland
Most of us have some sort of budget in mind when we travel. This can apply to what you spend per meal, per day, or on the whole trip. Regardless of what your mental calculations are, everyone loves saving money.
Basic Tips For Saving Money in Iceland
There are the basic money saving tips of using public transportation and packing reusable water bottles. Tap water in Iceland is fresh, delicious, and safe to drink, so fill up. Additionally, discount cards like the Reykjavik City Card will not only get you free or reduced entry to places of interest all over the capital. It also gives you unlimited use of the city’s public buses.
And of course, coming during the shoulder season and off-season leads to big savings. You can get up to 40% off car rentals and accommodation if you come outside of summer high season.
The Iceland Campingcard
If you’re staying at campsites, I highly recommend getting the Iceland Campingcard. It’s valid for 28 days from the date of first use and grants you entry to over 40 campsites during the summer season. This card is especially great for families traveling around the island. The longer you use the card, the more you save.
Gas cards are also something I suggest, but not specifically for saving money. It’s more that many times when you fill up at the pump, the gas company blocks an amount on your card, which means you can’t use that money. Prepaid gas cards like the N1 card or the Olís card bypass this problem.
More Money Saving Tips – Food in Iceland
Another thing that surprises people during their trip is the large percentage that food in Iceland eats up their budget. Many times just getting a simple soup and sandwich in a no-frills cafe you can run you $15. If you’re not careful, you’ll feel like money is dripping through your fingers like the waters at Skógafoss. Food in Iceland is expensive
Icelandic Hot Dogs and Snacks
One of the first things you can do to stretch your bucks in Iceland is to embrace your newfound love of Icelandic hot dogs. That’s right, I said hot dogs. This may come as a surprise to you, but something even more iconic than puffins, the Blue Lagoon, or our famous Northern Lights are these tasty snacks. They’re cheap, delicious, and sold everywhere, including gas stations.
I understand if you don’t want to spend your whole trip eating wieners in a bun, no matter how typical they are. You’ll probably also want to have a nice night out at a restaurant. If you can, stock up on healthy snacks and some staples for making sandwiches at a discount supermarket like Bónus or Nettó.
Saving Money on Alcohol
And of course, getting wine, beer or liquor from duty-free at the airport before your trip will save you tons of money. Believe me, your wallet will thank you later. And once your duty-free liquor has run out, be sure to take advantage of drink specials offered at happy hour. Download the Appy Hour app to find the best ones.
How Expensive is Iceland
At the end of the day, traveling costs money. When heading to a Scandinavian or Nordic locale like Iceland, the best you can do is be prepared for what to expect. Hopefully, these price approximations and money-saving tips will help you pinch some pennies while enjoying the trip of a lifetime.