diff --git a/apps/studio/components/layouts/ProjectLayout/index.test.tsx b/apps/studio/components/layouts/ProjectLayout/index.test.tsx
index 8fb816cf310..08552fbe6e6 100644
--- a/apps/studio/components/layouts/ProjectLayout/index.test.tsx
+++ b/apps/studio/components/layouts/ProjectLayout/index.test.tsx
@@ -47,6 +47,12 @@ vi.mock('common', () => ({
   mergeRefs:
     (..._refs: any[]) =>
     (_value: unknown) => {},
+  IS_PLATFORM: false,
+  LOCAL_STORAGE_KEYS: {
+    FREE_MICRO_UPGRADE_BANNER_DISMISSED: (ref: string) =>
+      `free-micro-upgrade-banner-dismissed-${ref}`,
+  },
+  isFeatureEnabled: () => false,
 }))
 
 vi.mock('framer-motion', () => ({
@@ -121,6 +127,27 @@ vi.mock('@/hooks/custom-content/useCustomContent', () => ({
   useCustomContent: () => ({ appTitle: 'Supabase' }),
 }))
 
+vi.mock('@/hooks/misc/useCheckEntitlements', () => ({
+  useCheckEntitlements: () => ({ hasAccess: false, isLoading: false }),
+}))
+
+vi.mock('@/hooks/misc/useLocalStorage', () => ({
+  useLocalStorageQuery: () => [false, vi.fn()],
+}))
+
+vi.mock('@/components/ui/BannerStack/BannerStackProvider', () => ({
+  BANNER_ID: { FREE_MICRO_UPGRADE: 'free-micro-upgrade-banner' },
+  useBannerStack: () => ({ addBanner: vi.fn(), dismissBanner: vi.fn(), banners: [] }),
+}))
+
+vi.mock('@/components/ui/BannerStack/Banners/BannerFreeMicroUpgrade', () => ({
+  BannerFreeMicroUpgrade: () => null,
+}))
+
+vi.mock('data/usage/resource-warnings-query', () => ({
+  useResourceWarningsQuery: () => ({ data: undefined }),
+}))
+
 vi.mock('@/hooks/misc/useSelectedOrganization', () => ({
   useSelectedOrganizationQuery: () => ({
     data: { name: 'Organization 1', slug: 'org-1' },
diff --git a/apps/studio/components/layouts/ProjectLayout/index.tsx b/apps/studio/components/layouts/ProjectLayout/index.tsx
index fe87e4e12d3..170d63eeedb 100644
--- a/apps/studio/components/layouts/ProjectLayout/index.tsx
+++ b/apps/studio/components/layouts/ProjectLayout/index.tsx
@@ -1,4 +1,5 @@
-import { mergeRefs, useParams } from 'common'
+import { LOCAL_STORAGE_KEYS, mergeRefs, useParams } from 'common'
+import { useResourceWarningsQuery } from 'data/usage/resource-warnings-query'
 import { AnimatePresence, motion } from 'framer-motion'
 import Head from 'next/head'
 import { useRouter } from 'next/router'
@@ -45,10 +46,8 @@ import { useCustomContent } from '@/hooks/custom-content/useCustomContent'
 import { useCheckEntitlements } from '@/hooks/misc/useCheckEntitlements'
 import { useLocalStorageQuery } from '@/hooks/misc/useLocalStorage'
 import { useSelectedOrganizationQuery } from '@/hooks/misc/useSelectedOrganization'
-import { useResourceWarningsQuery } from 'data/usage/resource-warnings-query'
 import { useSelectedProjectQuery } from '@/hooks/misc/useSelectedProject'
 import { withAuth } from '@/hooks/misc/withAuth'
-import { LOCAL_STORAGE_KEYS } from 'common'
 import { PROJECT_STATUS } from '@/lib/constants'
 import { buildStudioPageTitle } from '@/lib/page-title'
 import { getPathnameWithoutQuery } from '@/lib/pathname.utils'
@@ -126,11 +125,11 @@ export const ProjectLayout = forwardRef<HTMLDivElement, PropsWithChildren<Projec
     )
     const isComputeNearExhaustion =
       !!projectResourceWarnings?.cpu_exhaustion ||
-      !!projectResourceWarnings?.memory_and_swap_exhaustion
+      !!projectResourceWarnings?.memory_and_swap_exhaustion ||
+      !!projectResourceWarnings?.disk_space_exhaustion
     const isEligibleForFreeUpgrade =
-      entitledUpdateCompute &&
-      selectedProject?.infra_compute_size === 'nano' &&
-      isComputeNearExhaustion
+      entitledUpdateCompute && selectedProject?.infra_compute_size === 'nano'
+    const showUpgradeBanner = isEligibleForFreeUpgrade && isComputeNearExhaustion
     const [isFreeMicroUpgradeBannerDismissed] = useLocalStorageQuery(
       LOCAL_STORAGE_KEYS.FREE_MICRO_UPGRADE_BANNER_DISMISSED(selectedProject?.ref ?? ''),
       false
@@ -180,7 +179,7 @@ export const ProjectLayout = forwardRef<HTMLDivElement, PropsWithChildren<Projec
 
     useEffect(() => {
       if (!selectedProject?.ref) return
-      if (isEligibleForFreeUpgrade && !isFreeMicroUpgradeBannerDismissed) {
+      if (showUpgradeBanner && !isFreeMicroUpgradeBannerDismissed) {
         addBanner({
           id: BANNER_ID.FREE_MICRO_UPGRADE,
           isDismissed: false,
@@ -192,7 +191,7 @@ export const ProjectLayout = forwardRef<HTMLDivElement, PropsWithChildren<Projec
       }
     }, [
       selectedProject?.ref,
-      isEligibleForFreeUpgrade,
+      showUpgradeBanner,
       isFreeMicroUpgradeBannerDismissed,
       addBanner,
       dismissBanner,
diff --git a/apps/studio/components/ui/BannerStack/Banners/BannerFreeMicroUpgrade.tsx b/apps/studio/components/ui/BannerStack/Banners/BannerFreeMicroUpgrade.tsx
index 4a413126394..46e15a9f139 100644
--- a/apps/studio/components/ui/BannerStack/Banners/BannerFreeMicroUpgrade.tsx
+++ b/apps/studio/components/ui/BannerStack/Banners/BannerFreeMicroUpgrade.tsx
@@ -41,10 +41,10 @@ export const BannerFreeMicroUpgrade = () => {
           </div>
         </div>
         <div className="flex flex-col gap-y-1 mb-2">
-          <p className="text-sm font-medium">Free upgrade to Micro available</p>
+          <p className="text-sm font-medium">Your project is running low on resources</p>
           <p className="text-xs text-foreground-lighter text-balance">
-            Your Pro plan includes a free upgrade from Nano to Micro — double the memory at no extra
-            cost.
+            Your Nano compute is approaching its limits. Upgrade to Micro for free — it's included
+            in your Pro plan.
           </p>
         </div>
         <div className="flex gap-2">
diff --git a/apps/studio/components/ui/ComputeBadgeWrapper.tsx b/apps/studio/components/ui/ComputeBadgeWrapper.tsx
index 9294aa0162c..68f758615f3 100644
--- a/apps/studio/components/ui/ComputeBadgeWrapper.tsx
+++ b/apps/studio/components/ui/ComputeBadgeWrapper.tsx
@@ -106,30 +106,32 @@ export const ComputeBadgeWrapper = ({
   const isEligibleForFreeUpgrade = !!data && data.plan.id !== 'free' && computeSize === 'nano'
   const isLoading = isLoadingAddons || isLoadingSubscriptions
   const isComputeNearExhaustion =
-    !!resourceWarnings?.cpu_exhaustion || !!resourceWarnings?.memory_and_swap_exhaustion
-  const hasUpgradeAvailable = (isFreeOnNano || isEligibleForFreeUpgrade) && isComputeNearExhaustion
+    !!resourceWarnings?.cpu_exhaustion ||
+    !!resourceWarnings?.memory_and_swap_exhaustion ||
+    !!resourceWarnings?.disk_space_exhaustion
+  const showUpgradeGlow = isEligibleForFreeUpgrade && isComputeNearExhaustion
 
   if (!computeSize) return null
 
   return (
     <HoverCard onOpenChange={() => setOpenState(!open)} openDelay={280}>
       <HoverCardTrigger asChild className="group" onClick={(e) => e.stopPropagation()}>
-        <div className={cn('flex items-center', hasUpgradeAvailable && 'animate-badge-pulse')}>
+        <div className={cn('flex items-center', showUpgradeGlow && 'animate-badge-pulse')}>
           <div
             className={cn(
               'flex',
-              hasUpgradeAvailable && 'relative inline-flex overflow-hidden rounded'
+              showUpgradeGlow && 'relative inline-flex overflow-hidden rounded'
             )}
           >
             <ComputeBadge
               infraComputeSize={computeSize}
-              icon={hasUpgradeAvailable && <ChevronsUpAnimated />}
+              icon={showUpgradeGlow && <ChevronsUpAnimated />}
               className={cn(
-                hasUpgradeAvailable && 'text-brand-600 border-brand-500 bg-brand/10 gap-1',
+                showUpgradeGlow && 'text-brand-600 border-brand-500 bg-brand/10 gap-1',
                 badgeClassName
               )}
             />
-            {hasUpgradeAvailable && (
+            {showUpgradeGlow && (
               <span className="animate-badge-shimmer pointer-events-none absolute inset-0 bg-gradient-to-br from-transparent via-brand/20 to-transparent blur-md" />
             )}
           </div>
@@ -186,16 +188,20 @@ export const ComputeBadgeWrapper = ({
                 <p className="text-foreground">
                   {isFreeOnNano
                     ? 'Double your memory for free'
-                    : isEligibleForFreeUpgrade
-                      ? 'Free upgrade to Micro available'
-                      : 'Unlock more compute'}
+                    : isEligibleForFreeUpgrade && isComputeNearExhaustion
+                      ? 'Your project is running low on resources'
+                      : isEligibleForFreeUpgrade
+                        ? 'Free upgrade to Micro available'
+                        : 'Unlock more compute'}
                 </p>
                 <p className="text-foreground-light">
                   {isFreeOnNano
                     ? 'Upgrade to Pro and get a free Micro compute upgrade — double the memory at no extra cost.'
-                    : isEligibleForFreeUpgrade
-                      ? 'Your Pro plan includes a free upgrade from Nano to Micro compute.'
-                      : 'Scale your project up to 64 cores and 256 GB RAM.'}
+                    : isEligibleForFreeUpgrade && isComputeNearExhaustion
+                      ? 'Your Nano compute is approaching its limits. Your Pro plan includes a free upgrade to Micro — double the memory at no extra cost.'
+                      : isEligibleForFreeUpgrade
+                        ? 'Your Pro plan includes a free upgrade from Nano to Micro compute.'
+                        : 'Scale your project up to 64 cores and 256 GB RAM.'}
                 </p>
               </div>
               <div>