The cost of accommodation in Crete is generally far lower than in northern European countries. It is quite easy to find accommodation on the spot, except in the summer months (especially the first half of August) where you might encounter difficulties in some places. At that time it is best to reserve in advance if you can.
Reserving in advance will also avoid having to search around for an appropriate place immediately after arriving somewhere.
Most of the accommodation on Crete consists of hotels of every conceivable size. On the North coast they tend to be larger but in the less developed resorts as well as in the interior they are often very small (a few rooms) and quite simple and are more "rooms for rent" than hotels in the real sense of the word. Nowadays though, even simple rooms will have an attached bathroom, will almost invariably be clean and more and more offer air-conditioning. They also have the advantage of getting you a little closer to the real Crete and its people.
You can also find more and more studios and apartments with cooking facilities. Great if you stay a little longer, have children or don't want to have to eat in restaurants all the time.
Crete still has comparatively few holiday houses and villas for rent but the choice is growing fast.
In the last few years all-inclusive hotels seem to be becoming very prominent in larger resorts.
It is quite easy to rent a house or a flat on Crete. The legal hassle (contracts) is kept to a minimum or ignored. Prices vary a lot depending on location and standards as well as the length of rental.
For long term rental (one year or more) the city of Chania is one of the most expensive place in Greece and prices will be in the region of € 3-4 per sq.meters (cheap and low standard) to over € 6 per sq.m for better accommodation. Prices are naturally lower out of the cities although in some popular places where the demand outstrips what is on offer rental prices can be quite silly.
If you turn up as a foreigner you are likely to be asked for a little bit more (and sometimes a lot more) than what a local would pay so it is not a bad idea to negotiate a rental through a local friend or acquaintance. Apart from checking the ads in the local newspaper (inevitably in Greek) a very good way to look for a rental is to ask in the local kafenion of the area you have set your sights on.