diff --git a/posthog/api/hog_function.py b/posthog/api/hog_function.py
index 1381d5b351cde..339400a45aa78 100644
--- a/posthog/api/hog_function.py
+++ b/posthog/api/hog_function.py
@@ -146,7 +146,7 @@ def validate(self, attrs):
                     {"template_id": "The Data Pipelines addon is required to create custom functions."}
                 )
 
-            if template.status != "free":
+            if template.status != "free" and not instance:
                 raise serializers.ValidationError(
                     {"template_id": "The Data Pipelines addon is required for this template."}
                 )
diff --git a/posthog/api/test/__snapshots__/test_insight.ambr b/posthog/api/test/__snapshots__/test_insight.ambr
index d0cb1a5dc625c..cea3c1e49dcab 100644
--- a/posthog/api/test/__snapshots__/test_insight.ambr
+++ b/posthog/api/test/__snapshots__/test_insight.ambr
@@ -1380,12 +1380,12 @@
   LEFT OUTER JOIN "posthog_organizationmembership" ON ("ee_accesscontrol"."organization_member_id" = "posthog_organizationmembership"."id")
   WHERE (("ee_accesscontrol"."organization_member_id" IS NULL
           AND "ee_accesscontrol"."resource" = 'project'
-          AND "ee_accesscontrol"."resource_id" = '446'
+          AND "ee_accesscontrol"."resource_id" = '447'
           AND "ee_accesscontrol"."role_id" IS NULL
           AND "ee_accesscontrol"."team_id" = 99999)
          OR ("posthog_organizationmembership"."user_id" = 99999
              AND "ee_accesscontrol"."resource" = 'project'
-             AND "ee_accesscontrol"."resource_id" = '446'
+             AND "ee_accesscontrol"."resource_id" = '447'
              AND "ee_accesscontrol"."role_id" IS NULL
              AND "ee_accesscontrol"."team_id" = 99999)
          OR ("ee_accesscontrol"."organization_member_id" IS NULL
@@ -1493,12 +1493,12 @@
   LEFT OUTER JOIN "posthog_organizationmembership" ON ("ee_accesscontrol"."organization_member_id" = "posthog_organizationmembership"."id")
   WHERE (("ee_accesscontrol"."organization_member_id" IS NULL
           AND "ee_accesscontrol"."resource" = 'project'
-          AND "ee_accesscontrol"."resource_id" = '446'
+          AND "ee_accesscontrol"."resource_id" = '447'
           AND "ee_accesscontrol"."role_id" IS NULL
           AND "ee_accesscontrol"."team_id" = 99999)
          OR ("posthog_organizationmembership"."user_id" = 99999
              AND "ee_accesscontrol"."resource" = 'project'
-             AND "ee_accesscontrol"."resource_id" = '446'
+             AND "ee_accesscontrol"."resource_id" = '447'
              AND "ee_accesscontrol"."role_id" IS NULL
              AND "ee_accesscontrol"."team_id" = 99999)
          OR ("ee_accesscontrol"."organization_member_id" IS NULL
diff --git a/posthog/api/test/test_hog_function.py b/posthog/api/test/test_hog_function.py
index 18ef5e9cab2a4..55788bb058191 100644
--- a/posthog/api/test/test_hog_function.py
+++ b/posthog/api/test/test_hog_function.py
@@ -114,7 +114,7 @@ def test_free_users_cannot_use_without_template(self):
         assert response.status_code == status.HTTP_400_BAD_REQUEST, response.json()
         assert response.json()["detail"] == "The Data Pipelines addon is required to create custom functions."
 
-    def test_free_users_cannot_use_non_free_templates(self):
+    def test_free_users_cannot_create_non_free_templates(self):
         response = self._create_slack_function(
             {
                 "template_id": template_webhook.id,
@@ -124,6 +124,43 @@ def test_free_users_cannot_use_non_free_templates(self):
         assert response.status_code == status.HTTP_400_BAD_REQUEST, response.json()
         assert response.json()["detail"] == "The Data Pipelines addon is required for this template."
 
+    def test_free_users_can_update_non_free_templates(self):
+        self.organization.available_product_features = [
+            {"key": AvailableFeature.DATA_PIPELINES, "name": AvailableFeature.DATA_PIPELINES}
+        ]
+        self.organization.save()
+
+        response = self._create_slack_function(
+            {
+                "name": template_webhook.name,
+                "template_id": template_webhook.id,
+                "inputs": {
+                    "url": {"value": "https://example.com"},
+                },
+            }
+        )
+
+        assert response.json()["template"]["status"] == template_webhook.status
+
+        self.organization.available_product_features = []
+        self.organization.save()
+
+        payload = {
+            "name": template_webhook.name,
+            "template_id": template_webhook.id,
+            "inputs": {
+                "url": {"value": "https://example.com/posthog-webhook-updated"},
+            },
+        }
+
+        update_response = self.client.patch(
+            f"/api/projects/{self.team.id}/hog_functions/{response.json()['id']}/",
+            data=payload,
+        )
+
+        assert update_response.status_code == status.HTTP_200_OK, update_response.json()
+        assert update_response.json()["inputs"]["url"]["value"] == "https://example.com/posthog-webhook-updated"
+
 
 class TestHogFunctionAPI(ClickhouseTestMixin, APIBaseTest, QueryMatchingTest):
     def setUp(self):