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Prague is compact and its public transport is excellent, so the usual justification for paying a central premium — saving travel time — barely applies here.
The decision that matters
Do you need to be in Prague 1? Staying in the Old Town puts you in the middle of the crowd rather than the city, and it costs a premium for the privilege.
Vinohrady is five minutes on metro A and is the best all-round choice — Art Nouveau streets, good restaurants, quiet at night. Žižkov is cheaper again with the best pubs in the city. Holešovice and Karlín are on the metro and are where the interesting food has gone.
The full comparison is in where to stay in Prague.
Before booking
Noise. Ask for a courtyard room in the Old Town and Nové Město. Prague windows are frequently single-glazed and a handful of central streets have a stag-party problem that runs until four in the morning at weekends.
Lifts. Many Prague buildings are four or five storeys with no lift, and floor numbering starts above the ground floor. Ask explicitly.
Air conditioning, if you are travelling in July or August. The heat sits in the river valley and it is not universal.
Trams. A room on a tram route with old windows hears them from five in the morning.
When it costs most
Christmas markets from late November to early January, Easter, May, and summer weekends. January, February and November are the cheapest by a wide margin, and winter Prague is arguably the better trip.

