Having visited Venice twice, each time we were able to find an amazing deal on a place to stay. Famously known for hard-to-find and expensive rooms during high season, Venice posed a bit more of a challenge on our budget trips. The first time we traveled to the city of canals was on a 2-week Italian vacation - backpacker style. Most cities we stayed in hostels, guest-rooms, or private bed & breakfasts (which in Italy a lot of times are less expensive than budget hotels). Venice didn't have much to offer in the way of hostels (or ones with availability), and only having two days to explore, we wanted to be in the heart of the city instead of the outskirts.
I began searching through private apartment listings on Craigslist and other sites like VRBO (Vacation Rental By Owner) and found a handful of budget-friendly accommodations in the city. Quickly we narrowed the choices down and settled on a cute (but tiny) apartment in the San Polo district just next to the Frari church. The photos looked cute, and the owner was good with communication. Plus, we didn't have to send any money ahead of time. Instead they gave us a time and place to meet them when we arrived in Venice, and they led us to the apartment, gave us the keys, collected the rent, and off we went.
It was a very small room, but cutely decorated in the style of gondolas. Photos of famous gondoliers graced the walls, and there were life preservers hanging from the low wooden ceilings. The bathroom was tight, but had everything we needed, plus we didn't expect to spend any kind of time inside when we only had a couple days to explore the city. For an amazing price of 40 euros - it couldn't be beat.
Next time we visited Venice was a couple of years later during the year when we lived in Florence. We decided last minute to spend a weekend there with friends for Carnevale...but here was the dilemma: There were 5 of us total, it was the day before we wanted to visit, and it was the busiest weekend of the year for the city (which also meant the highest prices). Not only was it almost impossible to find a room available, but even if you could - the price was destined to be outrageous. Luckily, I went on VRBO again and found an entire apartment for rent only 1 block from the Rialto bridge. It was a 2 bedroom place with kitchen, sofabed in the livingroom, and in a quiet alley. After splitting the price between all 5 of us, it ended up to be only 30 euro/person/night. A steal of a deal! We headed there the next day and thoroughly enjoyed the festive weekend.