That sounds high to me, also.
I've seen rates better than that - just have to do some shopping around. Keep in mind that in Europe, AARP often gets better rates than AAA, as an example. And September is an excellent time to go.
Personally, we like to stay in B&B, having stayed there 3 times. We really like the Campiello Zen. Very nice! But there are many wonderful B&B from which to choose.
If money becomes an issue, you can always stay on the mainland and then take the train onto the island. There are some relatively cheap alternatives.