Smaller onsen are usually okay with tattoos these days. If not, usually covering it is fine. I have one on my upper arm, and I used to wrap a little towel around it. That was at a gym I went to, as well as a luxury spa I once went to. I've been to at least a dozen onsen and never had to cover up. People are just getting used to them, I guess.
The average onsen is $5-10, nothing extravagant.