diff --git a/.changeset/metal-hairs-build.md b/.changeset/metal-hairs-build.md
new file mode 100644
index 0000000000..9ed8bba01b
--- /dev/null
+++ b/.changeset/metal-hairs-build.md
@@ -0,0 +1,5 @@
+---
+'@backstage/plugin-rollbar-backend': patch
+---
+
+Updated README to include clearer installation instructions on how to install and configure.
diff --git a/plugins/rollbar-backend/README.md b/plugins/rollbar-backend/README.md
index 2dcf6495dd..d28ee60181 100644
--- a/plugins/rollbar-backend/README.md
+++ b/plugins/rollbar-backend/README.md
@@ -4,6 +4,58 @@ Simple plugin that proxies requests to the [Rollbar](https://rollbar.com) API.
 
 ## Setup
 
+1. Install the plugin using:
+
+```bash
+# From your Backstage root directory
+yarn add --cwd packages/backend @backstage/plugin-rollbar-backend
+```
+
+2. Create a `rollbar.ts` file inside `packages/backend/src/plugins/`:
+
+```typescript
+import { createRouter } from '@backstage/plugin-rollbar-backend';
+import { Router } from 'express';
+import { PluginEnvironment } from '../types';
+
+export default async function createPlugin(
+  env: PluginEnvironment,
+): Promise<Router> {
+  return await createRouter({
+    logger: env.logger,
+    config: env.config,
+  });
+}
+```
+
+3. Modify your `packages/backend/src/index.ts` to include:
+
+```diff
+ ...
+
+ import { Config } from '@backstage/config';
+ import app from './plugins/app';
++import rollbar from './plugins/rollbar';
+ import scaffolder from './plugins/scaffolder';
+
+ ...
+
+ async function main() {
+
+   ...
+
+   const authEnv = useHotMemoize(module, () => createEnv('auth'));
++  const rollbarEnv = useHotMemoize(module, () => createEnv('rollbar'));
+   const proxyEnv = useHotMemoize(module, () => createEnv('proxy'));
+
+   ...
+
+   const apiRouter = Router();
+   apiRouter.use('/catalog', await catalog(catalogEnv));
++  apiRouter.use('/rollbar', await rollbar(rollbarEnv));
+   apiRouter.use('/scaffolder', await scaffolder(scaffolderEnv));
+```
+
 The following values are read from the configuration file.
 
 ```yaml