terraform
Terraform enables you to safely and predictably create, change, and improve infrastructure. It is a source-available tool that codifies APIs into declarative configuration files that can be shared amongst team members, treated as code, edited, reviewed, and versioned.
The Lens
By Erik Loyd, SaaS CEO and former COO/CFO of an AWS Premier Partner.
Updated Sep 2026
Terraform lets you define your cloud infrastructure in code files instead of clicking through the AWS, GCP or Azure consoles. Write what you want, run terraform apply, and it creates everything. Change the file, run it again, and it updates only what changed. It's what most infrastructure teams reach for first.
The license is the part to understand. Since version 1.6 in 2023 it's under the Business Source License, now with IBM as licensor. Production use, including for your clients, is allowed; offering Terraform itself as a paid hosted or embedded product that competes with IBM's is not. Each version converts to open source MPL 2.0 four years after release. opentofu/opentofu is the fully open fork, MPL 2.0 under the Linux Foundation.
The CLI is free. HCP Terraform, the hosted version, is free up to 500 managed resources, with SSO, remote state and a private module registry included. Past that, Essentials runs about $0.10 per resource per month, Standard (policy checks and drift detection) about $0.47, and Premium (audit logs) about $0.99. Solo and small teams: CLI plus the free tier. Larger teams: Standard.
The catch is state. The state file is the source of truth, and a corrupted or out-of-sync state is the classic multi-hour outage. Store it remotely with locking from day one.
Free vs Self-Hosted vs Paid
source availableCLI
Free under BUSL-1.1. Internal and client production use is allowed; offering Terraform as a competing paid hosted or embedded product is not. Each version converts to MPL 2.0 four years after release (1.6.0 converts around October 2027).
HCP Terraform (hosted)
Free: Up to 500 managed resources, 1 concurrent run. Includes SSO, remote state and runs, VCS integration, team management and the private module registry. Essentials: About $0.00013 per resource-hour, roughly $0.10 per resource per month. 3 concurrent runs. HashiCorp's own example: 1,000 resources is about $98/mo. Standard: About $0.00064 per resource-hour, roughly $0.47 per resource per month. Adds policy enforcement, cost estimation and drift detection, with 10 concurrent runs. Premium: About $0.00135 per resource-hour, roughly $0.99 per resource per month. Adds audit logging, 200 concurrent runs. Prices are IBM's indicative pay-as-you-go rates and may vary by country.
Terraform Enterprise
Self-hosted HCP Terraform. Sales-priced.
Alternatives
OpenTofu is the MPL 2.0 fork. Spacelift, env0 and Scalr sell hosted runs and state for both.
CLI free for production use under BUSL. HCP Terraform is free to 500 resources, then roughly $0.10 to $0.99 per resource per month by tier.
What to do by team size
- Solo
- free; CLI plus HCP Terraform's free 500 resources
- Small team
- free tier, or Essentials at about $0.10 per resource past 500
- Medium team
- Standard for policy checks and drift detection
- Large team
- Premium or Terraform Enterprise for audit logging, or OpenTofu to avoid BUSL
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Trust Signals
License: BSL 1.1
BUSL-1.1 since v1.6.0 (2023), licensor IBM. Production use allowed, including for clients; offering Terraform as a competing paid hosted or embedded product is not. Each version converts to MPL 2.0 four years after release.
Commercial use: ✗ Restricted
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