We want to rent a car from vienna and drop it off in Venice or Bologna. I am getting hammerd with the drop off rate of $300.EU. Is there any way around the drop off fees?

Not really. Most companies don;t like to have their cars taken into Italy due to the high theft rate - and different counntry drop off charges are usual except for small neighbors (ie cars from Belgium in Germany).

Nope, and $300 isn't even bad. Someone's got to get the car back to Vienna.

Yes, there is a way around these fees. Drop off the car in Austria and take the train to Italy.

There is always a hefty, almost prohibitive, drop off charge between ANY two countries in Europe. Sometimes you can rent "close to a border. OR, for instance, rent in Italy drive up to Austria and return to Italy (or the same with Austrial rental,going down to Italy and returning to Austria)....OR train part of the way. Lots of options, and since you didn't detail your itinery it's hard to give many suggestions. But there truly isn't much in the way of "getting around the drop off fee"., and it's not worth it. I do know it is cheaper to rent in Austria than Italy. You can go into Italy with that car, but don't let them "upgrade" you to a premier car (such as Mercedes) because those are not allowed in Italy by the rental company.
Renting in Italy poses an additional fee for CDW insurance (UNLESS you have a letter from and charge it on Mastercard).

There are always drop off charges between countries but they are not always "hefty." Frankfurt to Paris is about $100 and Munich to Vienna is only about $70. Between anywhere and Italy, however, is always in the $250-plus range. Some companies simply won't do it. Great car rental advice at www.gemut.com.