It sounds like you already know a great deal. In brief, you always need to find a direct ancestor whose birth was documented in Italy. If you know which ancestor that is, and where that ancestor was born, write to the commune and request a copy of that ancestor's birth certificate.
At some point that ancestor (or his child perhaps) emigrated to the U.S. (in your case). Then you'll need to perform a diligent search to determine when/how that immigrant naturalized as a U.S. citizen. Naturalization, well timed, is actually a good thing. USCIS and NARA have most U.S. naturalization records. Adequately proving non-naturalization requires a bit more work.
You'll need to assemble a complete set of civil records -- birth, marriage, death, etc. -- up and down your direct line back to Italy. At some consulates they also want to see non-line spouses' records. If there are discrepancies among those records sometimes they're a problem, sometimes not. If they're a problem, you have to take steps to remedy them. There are a variety of ways to do that.
While all this research and document gathering is going on typically you'll want to make an appointment with an Italian consulate for citizenship recognition. You can always reschedule or cancel, but there is a long delay at most consulates. At the consulate in Miami the wait for an appointment is currently running about two years.
With respect to costs, if you want to hire somebody else to do the job it really just depends on the complexity of the case, document fees, and research time. It's not really the sort of thing you have to contract out, though. It is something you can do on your own in your spare time. Or hire an enthusiastic member of your family who is also interested. For example, you could come to an arrangement that you'll pay for all postal, document, apostille, translation, and other fees, while that other family member donates his/her time if you don't have enough.
Starting soon (sometime this year) there will be a new 300 euro fee charged per adult applicant for Italian citizenship recognition. That's up from the current application fee of zero. So unfortunately you have to factor that 300 euro into the total costs now.
Last edited by BBCWatcher; 25th June 2014 at 08:22 AM.