Our tour costs more than twice that. However it is for 8 days, 7 nights. Supposedly the longer you stay, the better your chance of seeing the northern lights. Also much of the time, we’re away from the city so less lighting. We looked at Collette tours which was approximately the same price. However, it was a large tourist group of up to 40 people, 7 days but included all meals. Our tour has a maximum of 8 people but doesn’t include all meals. We also get to see more than with Collette.
My daughter and I got back Friday from our 4 day trip. We had a fantastic time and all things considered, great weather. I am so glad we got to go to the Blue Lagoon . That was far better than I imagined it would be. I thought that it would be sort of slow with tourism, but it really wasn’t. We went on a couple of guided tours and one of the guides told us that tourism has really grown significantly since the volcano erupted there in 2010. We did see the northern lights, but it wasn’t a particularly clear view. They were light green , not as vibrant as I have seen in pictures, but at least I can say I have seen them 
I cannot wait to go back there !
@lje62 Now that you’ve been, what would you say is an ideal length of time for Iceland if you had your druthers? Did you feel going during winter restricted your visit at all? Thanks in advance and I’m glad you had a great time!
@doschicos , this was my second trip there and both times were only for a few days. I would have liked to stay longer , but we went on a budget. Since it is a relatively short flight from Boston, we were not really affected by jet lag ( although we took a 3 hour nap once we got to our hotel.)
The weather didn’t restrict us at all with the exception of not being able to walk all the way down to the waterfall Gullfoss. This did not in any way change the ability to take in the breath taking views. That was the only spot where I really felt the cold to a point where I went inside the visitor center to warm up. I have a very warm parka that was put to the test 
I wouldn’t hesitate to go in the winter at all.
We went to Iceland last August for a week. So, we didn’t see Northern Lights, of course, but would love to see them someday, as we have been on other trips to see total solar eclipses and the transit of Venus.
To get an idea of how common Northern Lights are currently, familiarize yourself with the spaceweather.com website and their gallery of current photos http://spaceweathergallery.com/aurora_gallery.html. (Remember that many of the photos are long exposures, so not what you will see with the naked eye.)
This thread has a lot of useful info on Iceland travel, and my trip summary is post #63: http://talk.collegeconfidential.com/parent-cafe/1851038-stopover-in-iceland-p1.html I forgot to mention there that the Skyr yogurt is quite tasty.
I would recommend avoiding WOW Air for travel to Iceland. Stories about cancelled flights and people having to wait several days for their next flight are common. On our flight, they removed several checked bags to lighten the plane and did not get them to Iceland for a couple days. It wasn’t as much of a problem for me as for the people who were booked on tours around the island or on backpacking trips who didn’t get their checked backpack.
@Ynotgo , that is good to know about WOW airlines…we met a group of girls that were chatting about the seemingly great deals on flights . It sounds a lot like Spirit air
@lje62 The price is higher after you figure in additional fees for checking a bag, having a seat reservation, any food on the flight, etc.
I have flown Icelandair 5 or 6 times…they have dropped in quality somewhat , like no meals included, fewer choices of movies, etc.but no issues at all with anything. They have package deals that make everything easy in terms of transfers additional tours and definitely steer you towards the hotels they own.
Eating out is very expensive in Iceland - $15-$20 burgers, it’s difficult to spend less than $30/person for a meal. You can always get food at the grocery store- much higher than the US but still a lot less than eating out.
@TooOld4School , yes it is expensive to eat out. We had only one * real * meal out during our stay. We ate a larger than normal breakfast at the hotel ( and I may or may not have taken a couple of pieces of fruit back to our room )
We had snacks in coffee shops, soup in the visitor center of one of the tours we went on and light , appetizer type foods in a gastro pub.