Peak season: June to August is the peak season to travel to Iceland, and hence, it's advisable that the bookings are done in advance. A lot of outdoor activities take place during this season, including the festivals.
Shoulder season: May to September is the time when there is occasional snowfall. Prices are low compared to the peak season. Fewer visitors travel during this period of the year.
Off-season: If you are interested in Northern Lights, October to April is the ideal time to visit Iceland. Skiing and other outdoor activities take place during these months. The winters are very harsh in this part of the world as the temperature can drop down to -25 degrees celcius.