diff --git a/pyproject.toml b/pyproject.toml
index 7c14ce54..77e76bbe 100644
--- a/pyproject.toml
+++ b/pyproject.toml
@@ -58,10 +58,8 @@ docs_generate = "sphinx-build -b markdown -E docs/sphinx docs/cli"
 docs_toc = "gfm-toc docs/cli/index.md -e 3"
 docs_title = {shell = "(echo \"# AlgoKit CLI Reference Documentation\\n\\n\"; cat docs/cli/index.md) > docs/cli/temp.md && mv docs/cli/temp.md docs/cli/index.md"}
 docs = ["docs_generate", "docs_toc", "docs_title"]
-package_unix = "pyinstaller --clean --onedir --hidden-import jinja2_ansible_filters --hidden-import multiformats_config --copy-metadata algokit --name algokit --noconfirm src/algokit/__main__.py --add-data './misc/multiformats_config/multibase-table.json:multiformats_config/' --add-data './misc/multiformats_config/multicodec-table.json:multiformats_config/'"
-package_windows = "pyinstaller --clean --onedir --hidden-import jinja2_ansible_filters --hidden-import multiformats_config --copy-metadata algokit --name algokit --noconfirm src/algokit/__main__.py --add-data ./misc/multiformats_config/multibase-table.json;multiformats_config/ --add-data ./misc/multiformats_config/multicodec-table.json;multiformats_config/"
-
-
+package_unix = "pyinstaller --clean --onedir --hidden-import jinja2_ansible_filters --hidden-import multiformats_config --copy-metadata algokit --name algokit --noconfirm src/algokit/__main__.py --add-data './misc/multiformats_config:multiformats_config/' --add-data './src/algokit/resources:algokit/resources/'"
+package_windows = "pyinstaller --clean --onedir --hidden-import jinja2_ansible_filters --hidden-import multiformats_config --copy-metadata algokit --name algokit --noconfirm src/algokit/__main__.py --add-data ./misc/multiformats_config;multiformats_config/ --add-data ./src/algokit/resources;algokit/resources/"
 [tool.ruff]
 line-length = 120
 select = [
diff --git a/src/algokit/core/utils.py b/src/algokit/core/utils.py
index 2d0a934f..084f2864 100644
--- a/src/algokit/core/utils.py
+++ b/src/algokit/core/utils.py
@@ -150,3 +150,11 @@ def get_base_python_path() -> str | None:
                 return str(candidate_path)
     # give up, we tried...
     return this_python
+
+
+def is_binary_mode() -> bool:
+    """
+    Check if the current Python interpreter is running in a native binary frozen environment.
+    return: True if running in a native binary frozen environment, False otherwise.
+    """
+    return getattr(sys, "frozen", False) and hasattr(sys, "_MEIPASS")
diff --git a/src/algokit/core/version_prompt.py b/src/algokit/core/version_prompt.py
index 0bc98d19..75838da4 100644
--- a/src/algokit/core/version_prompt.py
+++ b/src/algokit/core/version_prompt.py
@@ -1,3 +1,4 @@
+import importlib.resources as importlib_resources
 import logging
 import re
 from datetime import timedelta
@@ -6,13 +7,23 @@
 import click
 import httpx
 
+from algokit import __name__ as algokit_name
 from algokit.core.conf import get_app_config_dir, get_app_state_dir, get_current_package_version
+from algokit.core.utils import is_binary_mode
 
 logger = logging.getLogger(__name__)
 
 LATEST_URL = "https://api.github.com/repos/algorandfoundation/algokit-cli/releases/latest"
 VERSION_CHECK_INTERVAL = timedelta(weeks=1).total_seconds()
 DISABLE_CHECK_MARKER = "disable-version-prompt"
+DISTRIBUTION_METHOD_UPDATE_COMMAND = {
+    "snap": "`snap refresh algokit`",
+    "winget": "`winget upgrade algokit`",
+    "brew": "`brew upgrade algokit`",
+}
+UNKNOWN_DISTRIBUTION_METHOD_UPDATE_INSTRUCTION = "the tool used to install AlgoKit"
+# TODO: Set this version as part of releasing the binary distributions.
+BINARY_DISTRIBUTION_RELEASE_VERSION = "99.99.99"
 
 
 def do_version_prompt() -> None:
@@ -26,8 +37,26 @@ def do_version_prompt() -> None:
         logger.debug("Could not determine latest version")
         return
 
-    if _get_version_sequence(current_version) < _get_version_sequence(latest_version):
-        logger.info(f"You are using AlgoKit version {current_version}, however version {latest_version} is available.")
+    current_version_sequence = _get_version_sequence(current_version)
+    if current_version_sequence < _get_version_sequence(latest_version):
+        update_instruction = UNKNOWN_DISTRIBUTION_METHOD_UPDATE_INSTRUCTION
+        if is_binary_mode():
+            distribution = _get_distribution_method()
+            update_instruction = (
+                DISTRIBUTION_METHOD_UPDATE_COMMAND.get(distribution, UNKNOWN_DISTRIBUTION_METHOD_UPDATE_INSTRUCTION)
+                if distribution
+                else UNKNOWN_DISTRIBUTION_METHOD_UPDATE_INSTRUCTION
+            )
+        # If you're not using the binary mode, then you've used pipx to install AlgoKit.
+        # One exception is that older versions of the brew package used pipx,
+        # however require updating via brew, so we show the default update instruction instead.
+        elif current_version_sequence >= _get_version_sequence(BINARY_DISTRIBUTION_RELEASE_VERSION):
+            update_instruction = "`pipx upgrade algokit`"
+
+        logger.info(
+            f"You are using AlgoKit version {current_version}, however version {latest_version} is available. "
+            f"Please update using {update_instruction}."
+        )
     else:
         logger.debug("Current version is up to date")
 
@@ -85,6 +114,17 @@ def _skip_version_prompt() -> bool:
     return disable_marker.exists()
 
 
+def _get_distribution_method() -> str | None:
+    file_path = importlib_resources.files(algokit_name) / "resources" / "distribution-method"
+    with file_path.open("r", encoding="utf-8", errors="strict") as file:
+        content = file.read().strip()
+
+        if content in ["snap", "winget", "brew"]:
+            return content
+        else:
+            return None
+
+
 skip_version_check_option = click.option(
     "--skip-version-check",
     is_flag=True,
diff --git a/src/algokit/resources/distribution-method b/src/algokit/resources/distribution-method
new file mode 100644
index 00000000..e69de29b
diff --git a/tests/version_check/test_version_check.py b/tests/version_check/test_version_check.py
index df4d72ee..d33c0bcf 100644
--- a/tests/version_check/test_version_check.py
+++ b/tests/version_check/test_version_check.py
@@ -140,3 +140,26 @@ def test_version_check_enable_version_check(app_dir_mock: AppDirs) -> None:
     assert result.exit_code == 0
     assert not disable_version_check_path.exists()
     verify(result.output, scrubber=make_scrubber(app_dir_mock))
+
+
+@pytest.mark.parametrize(
+    ("method", "message"),
+    [
+        ("snap", "snap refresh algokit"),
+        ("brew", "brew upgrade algokit"),
+        ("winget", "winget upgrade algokit"),
+        (None, "the tool used to install AlgoKit"),
+    ],
+)
+def test_version_prompt_according_to_distribution_method(
+    mocker: MockerFixture, app_dir_mock: AppDirs, method: str, message: str
+) -> None:
+    mocker.patch("algokit.core.version_prompt._get_distribution_method").return_value = method
+    mocker.patch("algokit.core.version_prompt.is_binary_mode").return_value = True
+    mocker.patch("algokit.core.version_prompt.get_current_package_version").return_value = "1.0.0"
+    version_cache = app_dir_mock.app_state_dir / "last-version-check"
+    version_cache.write_text("2.0.0", encoding="utf-8")
+
+    result = invoke("bootstrap env", skip_version_check=False)
+    assert result.exit_code == 0
+    assert message in result.output
diff --git a/tests/version_check/test_version_check.test_version_check_queries_github_when_cache_out_of_date.approved.txt b/tests/version_check/test_version_check.test_version_check_queries_github_when_cache_out_of_date.approved.txt
index 59d9cebe..9760a037 100644
--- a/tests/version_check/test_version_check.test_version_check_queries_github_when_cache_out_of_date.approved.txt
+++ b/tests/version_check/test_version_check.test_version_check_queries_github_when_cache_out_of_date.approved.txt
@@ -1,6 +1,6 @@
 DEBUG: 1234.56.78 found in cache {app_state}/last-version-check
 DEBUG: HTTP Request: GET https://api.github.com/repos/algorandfoundation/algokit-cli/releases/latest "HTTP/1.1 200 OK"
 DEBUG: Latest version tag: v{new_version}
-You are using AlgoKit version {current_version}, however version {new_version} is available.
+You are using AlgoKit version {current_version}, however version {new_version} is available. Please update using the tool used to install AlgoKit.
 DEBUG: Attempting to load project config from {current_working_directory}/.algokit.toml
 DEBUG: No .algokit.toml file found in the project directory.
diff --git a/tests/version_check/test_version_check.test_version_check_queries_github_when_no_cache.approved.txt b/tests/version_check/test_version_check.test_version_check_queries_github_when_no_cache.approved.txt
index a4a25d09..c4dbc075 100644
--- a/tests/version_check/test_version_check.test_version_check_queries_github_when_no_cache.approved.txt
+++ b/tests/version_check/test_version_check.test_version_check_queries_github_when_no_cache.approved.txt
@@ -1,6 +1,6 @@
 DEBUG: {app_state}/last-version-check inaccessible
 DEBUG: HTTP Request: GET https://api.github.com/repos/algorandfoundation/algokit-cli/releases/latest "HTTP/1.1 200 OK"
 DEBUG: Latest version tag: v{new_version}
-You are using AlgoKit version {current_version}, however version {new_version} is available.
+You are using AlgoKit version {current_version}, however version {new_version} is available. Please update using the tool used to install AlgoKit.
 DEBUG: Attempting to load project config from {current_working_directory}/.algokit.toml
 DEBUG: No .algokit.toml file found in the project directory.
diff --git a/tests/version_check/test_version_check.test_version_check_uses_cache.approved.txt b/tests/version_check/test_version_check.test_version_check_uses_cache.approved.txt
index c7990176..ce57ae48 100644
--- a/tests/version_check/test_version_check.test_version_check_uses_cache.approved.txt
+++ b/tests/version_check/test_version_check.test_version_check_uses_cache.approved.txt
@@ -1,4 +1,4 @@
 DEBUG: 1234.56.78 found in cache {app_state}/last-version-check
-You are using AlgoKit version {current_version}, however version 1234.56.78 is available.
+You are using AlgoKit version {current_version}, however version 1234.56.78 is available. Please update using the tool used to install AlgoKit.
 DEBUG: Attempting to load project config from {current_working_directory}/.algokit.toml
 DEBUG: No .algokit.toml file found in the project directory.