When we first started thinking about an arctic adventure, we were uncertain about costs and opted for an organised tour via Secret Escapes. (requires an email address for access but no password). Examples of current prices (accommodation typically includes a buffet breakfast only) include:
3 nights for £399pp (assumes 2 travelling), with regional airport options, transfers and northern lights tour (additional tours are chargeable)
4 nights from £699pp with tours included
5 nights from £469pp with rental car instead of tours
7 nights from £1498pp
The entry level price is a great way to see Iceland - but what how does making plans independently stack up?:
Flights
Return flights from £50-£100 (outside peak periods - November, January and March can often be cheapest, including regional airports. Go for a week if you can - 3-4 day trips are great but can feel brief and despite Iceland's changeable conditions, one spell of cloudy weather can hinder your chances of seeing the aurora.
Travelling with children at half term presents a difference challenge - it's a case of having to be on the ball, booking quickly when prices are released because they only seem to go up. The good news is there's plenty of accommodation - just be careful if you are booking around Christmas. Lots of accommodation includes free cancellation for peace of mind.
Hire car
We find skyscanner car hire usually provides the most competitive prices - for example, a small car rental for one week in Iceland in early March is £150 for the week.
Insurance for hire car excess - expect
to pay around £30 for a week or £45 for a year-long policy (if you plan to drive abroad again). Questor insurance is the cheapest UK option we've found. Do not agree to buy a policy at the desk - it's possible to pay hundreds to remove your excess liability and it's just not worth paying when there are viable alternatives.
Accommodation
Reykjavik is the most accessible and popular place to stay but it's also worth looking at Airbnb and online accommodation searches outside the city area. Anticipate around £100 a night. If you plan to aurora hunt, the city lights can be a hinderance, so you'll either have to drive somewhere more rural, join an organised tour or find somewhere more remote to stay.
We have found that accommodation about 15-30 minutes from Selfoss has been the best place to look as it's still reasonably near to shops, rural enough to be away from light pollution, close to the golden circle, and on the way to Vik and the south of the island which is home to many wonderful destinations.
With the above in mind, the following is possible:
£100 return flights per person
Car hire plus insurance - £150-£200
£100 a night accommodation
The longer you stay, the potentially better a deal you get and you'll have the freedom to go anywhere, visit multiple places in a day and not be held to bus travel in groups where your time is determined by the schedule (and by the way. there's nothing wrong with this if you'd prefer not to drive and for plans to be taken care of - we loved the social element of a group tour).
Food and drink
It's worth bearing in mind that Iceland is a remote island with weather conditions that do not lend themselves to growing food, so food, drink and fuel will cost a bit more and dining out can get expensive depending on where you go.
Pizza is popular in Iceland, and their favourite takeaway food his supposedly Domino's (McDonalds failed in Iceland), so you'll see a fair few dotted around. There is an Icelandic fish and chips restaurant near the harbour in Reykjavik that charges around £15 for main courses.
Alcohol is sold in state liquor stores (Vínbúðin) and any alcohol found in shops and supermarkets will be <2%. Buying your favourite tipple in the airport duty free might save you a bit of hassle and cost (it's just worth bearing in mind that Icelandic laws effectively mean you should never have a drink and drive).
Many bars offer happy hour prices in early evening in Reykjavik, which will help make your travel money go further. Or just forget about drinking for a few days and get out aurora hunting instead 🙂
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