Staying on Murano vs in Venice itself?

The problem with Murano is the commute. You will be taking the vaporetto to see anything not on Murano itself. And in the event of a vaporetto strike, you'll be stranded (unless you can find and pay for a water taxi - which will quickly eat up any savings on a hotel). But Murano is still part of Venice, so it's not like staying on the mainland. And you'll have easy access to San Michele, the cemetery island, which I found fascinating.

Did you try vrbo? A quick search seems to show lots of places available for your dates - cheaper than $500 night! I always look for ones with good reviews...

http://www.vrbo.com/vacation-rentals/europe/italy/veneto/venice?from-date=2014-09-17&to-date=2014-09-21

I think staying on Murano would be fine – certainly better than $500 and wretched reviews. I've never stayed on Murano, but I've enjoyed visits. I'm not much into shopping, and I've never been to a glass-blowing demonstration, but Murano has a couple of lovely early churches, and pleasant canals to walk along. Last time I was there, we had a lovely canal-side dinner, in a much quieter venue than we would've found in Venice. Murano has the canals of Venice and similar architecture, if that's what you want, and it seems fairly quiet in the early evening. My guess is there's not a lot of night life, if that's important to you.

Also consider a visit to Burano and Torcello. I particularly enjoy Torcello, a largely deserted island with the earliest church on the lagoon and beautiful mosaics.

From Murano, it will take you about a half hour to get to Venice proper (maybe a little more… I enjoyed the rides, so I wasn't paying attention to how much time they took), and that takes you to the opposite side of the island from the Grand Canal. To get to the Grand Canal, you could stay on the vaporetto for another 20 minutes or so, or walk across the island, exploring as you go.

And since someone above mentioned being stranded on Murano in case of a strike… Certainly there's no way to guarantee there won't be a strike. However, I've been to Venice several times, spending anywhere from 4 to 8 days there on each visit. I've only encountered a vaporetto strike once. There was plenty of prior warning and it was schedule for one day, so I simply adjusted my touring plans to do the things close to my hotel that day. Also, even during that strike, there was scheduled vaporetto service to major stops. So I doubt you'd find yourself stranded, needing to resort to a water taxi. I could've gotten around by vaporetto during that strike if I had wanted to.

You could also stay in Venezia Mestre.
Mestre is in the mainland but it's part of the city of Venice. I see on venere.com hotels within one minute walk from the station at under €100 a night. Since commute you must, you might as well do it to a place that you can reach in under 10 min by train. The last train back to Mestre from the historical center of Venice departs at 12:30am and even if you miss it, you can take a regular taxi (a regular car) back at any time of the night for under €20. Just walk to Piazzale Roma.
It's up to you, but I would not fork out $500/night to stay in the historical center.
Of course you will hear a lot of people telling you how magic it is to stay in Venice. That is actually a lot of Bologna (another Italian city). When you are asleep there is no difference where you are sleeping. What is important is accessibility and Mestre is well connected by frequent trains and buses. The trip is less than 10 min to the historical center and it costs just €1.50. Murano is a longer trip by vaporetto and if you miss the last one back, you have to take a very expensive water taxi.

Cyndi, I just went to booking.com and searched for lodging for Sept 3 to 7, as an example, in the under $300 price range, and found a number available with positive ratings, B & Bs, apartments, small hotels. On short notice you might need to go without an elevator, etc. Especially if this is your first visit to Venice, I think being in the city is really important. Murano would be a considerably lesser choice, IMHO. The early morning and evening hours are the most special in Venice, when day trippers have left town or returned to their cruise shops. It's nice to be able to take a break in your room, to relax, change clothes or clean up. You might want to visit a particular site, and then return later in the day when it's less crowded or when the light is better for photography. The total commute from Murano could be a somewhat lengthy one, when you include walking to a vaporetto stop, waiting for the boat, the ride itself, and then getting from the final stop to where you're headed.

I also found many places available on your dates for under $200. A few months ago I stayed at Locanda San Marcuolo, good breakfast, near train station, elevator, very clean. Try booking.com. They will send you last-minute deals if you sign up for that.

In terms of commute, Roberto's logic is impeccable, but if you want Venice 24/7. and have to choose an island, I would stay on Burano. More charming than Murano.

Hotel Tivoli in San Polo neighborhood is a clean, safe option. It's not fancy. Plain decor. But, not dirty or scary either. We liked the area - near Frari church and Scuola San Rocco. There are staircases and no elevator. We had a triple on the top floor. I recommend it. Very close to San Toma Vaporetto stop. Friendly staff.

I will be in Italy in November and plan to stay in Padova and take the train into Venice - 25 minutes - on good weather days - just a suggestion.

Just checked Expedia. Wow, there's not much available this late, but here's an option to get you into the area you want to see:

Hotel De L’Alboro $287
San Marco 3894/b - Corte De L Alboro, Venice, VE 30124 Italy