Last Updated: August 23, 2023
Why Is Bali So Cheap? (7 Things To Know)
We all know and love Bali as a cheap destination in Indonesia. But have you ever thought about why Bali is so cheap?
After all, we take it for granted that you can buy a beer for a dollar or two. So let’s find out why!
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Factors Making Bali Cheap
There are a number of things that make Bali cheaper than other destinations:
Lower Cost of Living
In general, the lower the cost of living somewhere, the cheaper it is going to be for Westerners to visit!
The cost of living in many parts of Indonesia, including Bali, is significantly lower than in many Western countries. This means that everything from food to transportation tends to be less expensive, and makes your visit all the more affordable.
For example, while you might pay upwards of $4-5 for a beer in the US, and even more in Australia, you might find a similar quality beer in Bali for just $1-2.
Currency Exchange Rate
US Dollar to the Indonesian Rupiah – 5 years
If your currency is very strong when you travel, everything overseas starts to get cheaper. So, although the USD to the Indonesian Rupiah might always be strong, there are times when you might get 10-20% more on the exchange rate.
If you take a look at the chart above, you can see that Feb 2020 was a low point for the US dollar compared to the Indonesian Rupiah. And now, you are getting 12% more than that time!
Business Competition
Given Bali’s popularity as a tourist destination, there’s a lot of competition among businesses, especially in the hospitality sector. And as we all know, competition can drive prices down.
So, when there are too many hotels, spas or restaurants in a specific area, and they are not fully booked, they will give you a better deal. This is going to be more true in areas of Bali such as Ubud or Seminyak where there is a higher concentration of accommodation and services.
Labor Costs
Wages in Bali and Indonesia as a whole are generally lower than in Western countries. And that means that services become cheaper too.
This translates to lower prices in restaurants, bars, hotels, taxis, and more. Sure, imported Western goods will still be expensive because they have Western labor rates attached to them. But anything local will be significantly cheaper. Lower labor costs translate to cheaper services.
Personal services like massages, spa treatments, or hiring a driver for a day can be very affordable. Whereas a massage might cost upwards of $60 for an hour in the US, in Bali you can find high-quality massages for as little as $20 an hour on the lower end.
Infrastructure and Standards
While Bali has a lot of very luxurious accommodation that is certainly not cheap, it also has a large number of budget options geared towards the backpackers and lower end of the market.
Such places might not have the same kind of amenities or standards that some Western tourists are used to. But, if you are looking for a cheap place to eat or sleep, then you can certainly save a fortune.
Simple guesthouses or “homestays” with fans instead of air conditioning will generally be more affordable than luxury villas or big hotel chains.
Bargaining
Bargaining is a part of the culture in Bali. We are used to fixed prices in malls and stores, but in Bali, you can try to bargain just about anywhere.
Remember that when you go shopping, the price is not the price and sometimes it might be as much as 50% cheaper.
