What you'll learn: This article explains what has changed in Terraform Cloud's pricing, what it means for free customers, and which options you have if your cloud infrastructure grows beyond a free tier and you need to make a money decision about where to spend.

Terraform Cloud pricing is changing. Hashicorp announced last week that it's discontinuing its free pricing tier as people know it. The company is retiring the legacy, user-based Free plan in HashiCorp Cloud Platform (HCP) Terraform and moving remaining organizations to the enhanced Free tier by March 31, 2026.

So, is HCP Terraform still free? What does this mean for customers of the current free tier, and what alternatives do they have?

Is Terraform Cloud free? What is changing?

Is Terraform still free? Yes, but it will depend on which Terraform you need.

Terraform Community Edition (the CLI) is unchanged by the announcement and will remain free to download and run for personal projects and for most teams.
HCP Terraform (Cloud) users on the legacy edition are those affected by the announcement, as they'll have to migrate to the enhanced free tier by the deadline, which has a 500-resource cap.

HCP Terraform, a SaaS solution that was previously known as Terraform Cloud and often referenced as HashiCorp Terraform Cloud, offers state management, VCS integration, secure variable storage, remote operations, and other enterprise features. It still has a free edition, but the older free plan type called Free (Legacy) is reaching end of life on March 31, 2026, and HashiCorp will transition remaining organizations to the enhanced Free tier that was introduced in 2023.

The enhanced Free tier comes with up to 500 managed resources at no charge and unlimited users, so the free tier includes a real team workflow while shifting the limit from headcount to usage. HashiCorp calls this Resources Under Management, or RUM, and the RUM pricing model counts resources in an HCP Terraform-managed state file where mode equals managed, starting from the first plan and apply, with null resources excluded.

So is Terraform Cloud free? Yes, but there will be new limits imposed on all users in 2026. However, there is currently no indication that Terraform Cloud pricing beyond the free tier will change.

What the HCP Terraform free tier change means for you

If you use HCP Terraform on Free (Legacy), you should expect a prompt to migrate. HashiCorp calls out that this migration "is not reversible back to older legacy plan types," which is why this feels like a bigger pricing model change than a normal upgrade.

For a small team, the enhanced Free tier can be a step up. The older free tier limited organizations to five active members, while the updated Free plan covers up to 500 managed resources and includes unlimited users. That can remove a surprisingly painful barrier when you want more people involved in reviews and approvals.

For large teams and larger organizations, two limits tend to show up first.

The first limit is resources

As infrastructure as code spreads, your state file grows, and the managed resources count grows with it. Once you cross 500 managed resources, you are likely looking at a paid plan and paid tiers where your bill is tied to usage.

The second limit is concurrency

The HCP Terraform Free plan is limited to one concurrent run, and the standard tier is limited to three concurrent runs. If your workflow runs a plan on every pull request, a one-run queue can become a daily bottleneck.

One practical challenge is predictability. A per-resource model means your cost increases as your infrastructure grows, even if you deploy less often.

It's worth noting, though, that the impact depends on how you use Terraform today and what kind of teams you have.

If you mostly use Terraform locally, little changes. You can keep using the Terraform CLI, keep your state file where you choose, and keep full control by using a self-hosted backend for state management. This approach stays free, but you own access controls, locking, secrets handling, and audits.

If you use HCP Terraform today on the enhanced Free tier, HashiCorp says no action is required.

Why HashiCorp is migrating users to the enhanced Free tier

HashiCorp has positioned the enhanced Free tier as their way to keep the entry point free while making the default workflow more secure and more representative of how customers use the product.

In the announcement, HashiCorp highlights access to security and governance-oriented capabilities from the start, including SSO, policy as code, run tasks, and agents. Those agents are essentially private workers that let you run remote operations in your own network while keeping the benefits of Terraform Cloud-style workflows.

The business logic is as follows: A usage-based model that prices around managed resources ties revenue to the growth of customer infrastructure, which aligns with how many infrastructure platforms monetize. It also creates clearer upgrade paths as usage increases, rather than relying primarily on per-user seats.

HashiCorp has also continued to expand higher-tier packaging, including an enterprise tier in the form of Terraform Enterprise for self-hosted deployments and Premium for additional private infrastructure capabilities on top of Standard and plus tier style plans.

Terraform pricing

Pricing changes over time, so treat this section as accurate as of December 22, 2025 and verify before you buy.

Terraform CLI is free for most users in most commercial settings. HCP Terraform is the cloud offering with a free tier and paid plan options. Terraform Enterprise is the self-hosted version for organizations that need full control, enterprise support, and enterprise features beyond what the SaaS offers.

Plan	Where it runs	Metering	Starting list price	Notes
HCP Terraform Free	Cloud	Up to 500 managed resources included	$0	Unlimited users, one concurrent run, Free (Legacy) ends March 31, 2026
HCP Terraform Essentials	Cloud	Per managed resource	Starting at $0.10 per month per resource	Entry paid plan
HCP Terraform Standard	Cloud	Per managed resource	Starting at $0.47 per month per resource	Can enable audit logs, continuous validation, and drift detection
HCP Terraform Premium	Cloud	Per managed resource	Starting at $0.99 per month per resource	Additional features for scaling securely in private environments
Terraform Enterprise	Self managed	Contract	Custom pricing	Self-hosted installation with premium support included
HCP Terraform Europe	Cloud	Contract	Custom pricing	Geographic service locality option for Europe

If you're trying to estimate cost, focus first on managed resources, as that is what the cloud pricing is based on. Then, look at edition limits like concurrency and the advanced features you need. HashiCorp's own docs explicitly point you at managed resource pricing for cost estimation, and the pricing page provides estimated hourly rates for Standard and Premium.

Standard is rated hourly at $0.00064 per hour
Premium is rated hourly at $0.00135 per hour

No-code provisioning is another feature that can push teams toward paid plans, especially when you're building internal platform workflows for non-infrastructure engineers. HCP Terraform supports no-code provisioning, so users can deploy pre-built modules without writing Terraform configuration.

The benefits of using Terrateam

If you like Terraform but want a different advantage in how you pay and how you scale, Terrateam is worth considering.

Terrateam is an infrastructure-as-code solution that’s designed around the idea that governance happens at the human decision points in a pull request. Instead of charging for runners, workspaces, or executions, Terrateam charges per user and makes runners free, including private runners. On paid plans, we also emphasize unlimited runs and unlimited concurrency so your deploy cadence does not get stuck behind a queue as your usage increases.

This can matter once your infrastructure grows past 500 managed resources. With Terrateam, cost scales with users rather than resources, which can be easier for teams to budget and explain to the business.

Terrateam also gives you deployment choices. Our open source edition is licensed under MPL 2.0 and includes core automation features like policy enforcement, cost estimation, safe parallel execution, drift detection, and a self-hosted version you can run for full control and better performance in locked-down environments.

Drift detection is a good example. Terrateam can run scheduled plans against all relevant directories and open a GitHub Issue when it detects drift, with an option to reconcile.

Learn more about Terrateam's pricing to find the right solution for your team.

Conclusion

Is Terraform still free? You can still use Terraform CLI for free, and HCP Terraform still has a free tier. The change is that the legacy free plan is ending on March 31, 2026, and the enhanced Free tier that's replacing it is based on managed resources rather than users.

If you want to keep a pull request-based workflow without tying your budget to the RUM pricing model, Terrateam is a solid alternative. Start with Terrateam's free option for personal projects and a small team, then upgrade when you need enterprise features, stronger governance, and dedicated support as your infrastructure and company scale.

Features

Learn More

Learn

Connect