diff --git a/README.md b/README.md
index 7e2f045..83ff0bd 100644
--- a/README.md
+++ b/README.md
@@ -187,9 +187,9 @@ services:
       - "8080:8080"
     volumes:
       - /var/run/docker.sock:/var/run/docker.sock
-      - ${HOST_DATA_DIR:-./data}:/var/lib/upaas
+      - ${HOST_DATA_DIR}:/var/lib/upaas
     environment:
-      - UPAAS_HOST_DATA_DIR=${HOST_DATA_DIR:-./data}
+      - UPAAS_HOST_DATA_DIR=${HOST_DATA_DIR}
       # Optional: uncomment to enable debug logging
       # - DEBUG=true
       # Optional: Sentry error reporting
@@ -199,8 +199,16 @@ services:
       # - METRICS_PASSWORD=secret
 ```
 
-**Important**: When running µPaaS inside a container, set `UPAAS_HOST_DATA_DIR` to the host path
-that maps to `UPAAS_DATA_DIR`. This is required for Docker bind mounts during builds to work correctly.
+**Important**: Set `HOST_DATA_DIR` to an **absolute path** on the Docker host before running
+`docker compose up`. Relative paths will not work because docker-compose may not run on the same
+machine as µPaaS. This value is used both for the bind mount and passed to µPaaS as
+`UPAAS_HOST_DATA_DIR` so it can create correct bind mounts during builds.
+
+Example:
+```bash
+export HOST_DATA_DIR=/srv/upaas-data
+docker compose up -d
+```
 
 Session secrets are automatically generated on first startup and persisted to `$UPAAS_DATA_DIR/session.key`.