diff --git a/ci.nix b/ci.nix
index ea9f6004..9d1c043f 100644
--- a/ci.nix
+++ b/ci.nix
@@ -7,6 +7,7 @@ let
 
   dream2nix-repo = import ./examples/dream2nix-repo {
     dream2nixSource = ./.;
+    inherit pkgs;
   };
 
   dream2nix-repo-flake = (import ./examples/dream2nix-repo-flake/flake.nix).outputs {
diff --git a/examples/dream2nix-repo-flake/flake.nix b/examples/dream2nix-repo-flake/flake.nix
index 7a7a03cb..f9d0a65c 100644
--- a/examples/dream2nix-repo-flake/flake.nix
+++ b/examples/dream2nix-repo-flake/flake.nix
@@ -19,7 +19,7 @@
       projectRoot = ./.;
       # can be changed to ".git" or "flake.nix" to get rid of .project-root
       projectRootFile = "flake.nix";
-      packagesDir = "/packages";
+      packagesDir = ./packages;
       packageSets.nixpkgs = nixpkgs.legacyPackages.${system};
     };
   };
diff --git a/examples/dream2nix-repo/default.nix b/examples/dream2nix-repo/default.nix
index 73e90d1c..1edac055 100644
--- a/examples/dream2nix-repo/default.nix
+++ b/examples/dream2nix-repo/default.nix
@@ -4,16 +4,16 @@
       url = "https://github.com/nix-community/dream2nix/tarball/main";
       # sha256 = "";
     },
+  pkgs ? import (import dream2nixSource).inputs.nixpkgs {},
 }: let
   dream2nix = import dream2nixSource;
-  nixpkgs = import dream2nix.inputs.nixpkgs {};
   # all packages defined inside ./packages/
   packages = dream2nix.lib.importPackages {
     projectRoot = ./.;
     # can be changed to ".git" to get rid of .project-root
     projectRootFile = ".project-root";
-    packagesDir = "/packages";
-    packageSets.nixpkgs = nixpkgs;
+    packagesDir = ./packages;
+    packageSets.nixpkgs = pkgs;
   };
 in
   # all packages defined inside ./packages/
diff --git a/modules/dream2nix/core/paths/interface.nix b/modules/dream2nix/core/paths/interface.nix
index 4ad7f0bc..7e7bc01a 100644
--- a/modules/dream2nix/core/paths/interface.nix
+++ b/modules/dream2nix/core/paths/interface.nix
@@ -2,11 +2,13 @@
   lib,
   config,
   ...
-}: {
+}: let
+  cfg = config.paths;
+in {
   options.paths = lib.mapAttrs (_: lib.mkOption) {
     # mandatory fields
     projectRoot = {
-      type = lib.types.path;
+      type = lib.types.pathInStore;
       description = ''
         Path to the root of the project on which dream2nix operates.
         Must contain the marker file specified by 'paths.projectRootFile'
@@ -16,13 +18,22 @@
       example = lib.literalExpression "./.";
     };
     package = {
-      type = lib.types.str;
+      type = lib.types.either lib.types.path lib.types.str;
       description = ''
         Path to the directory containing the definition of the current package.
         Relative to 'paths.projectRoot'.
 
         This helps locating package definitions for lock & update scripts.
       '';
+      apply = path': let
+        projectRoot = toString cfg.projectRoot;
+        path = toString path';
+      in
+        if path == projectRoot
+        then "./."
+        else if lib.hasPrefix projectRoot path
+        then lib.path.subpath.normalise "./${lib.removePrefix projectRoot path}"
+        else lib.path.subpath.normalise "./${path}";
     };
 
     # optional fields
diff --git a/modules/dream2nix/php-granular/interface.nix b/modules/dream2nix/php-granular/interface.nix
index 024c2680..d46ecd63 100644
--- a/modules/dream2nix/php-granular/interface.nix
+++ b/modules/dream2nix/php-granular/interface.nix
@@ -20,7 +20,7 @@ in {
       }));
     };
     composerInstallFlags = {
-      type = t.listOf t.string;
+      type = t.listOf t.str;
       default = [];
     };
   };
diff --git a/modules/flake-parts/examples.nix b/modules/flake-parts/examples.nix
index aadd873e..5325606c 100644
--- a/modules/flake-parts/examples.nix
+++ b/modules/flake-parts/examples.nix
@@ -30,6 +30,15 @@
       packagePath = "/examples/packages/${dirName}/${name}";
     });
 
+  importFlake = flakeFile: let
+    self' = (import flakeFile).outputs {
+      dream2nix = self;
+      nixpkgs = inputs.nixpkgs;
+      self = self';
+    };
+  in
+    self';
+
   # Type: [ {${name} = {module, packagePath} ]
   allExamples = mapAttrsToList (dirName: _: readExamples dirName) packageCategories;
 
@@ -96,7 +105,16 @@ in {
   in {
     # map all modules in /examples to a package output in the flake.
     checks =
-      lib.mapAttrs (_: drvModules: makeDrv drvModules)
-      allModules;
+      (lib.mapAttrs (_: drvModules: makeDrv drvModules) allModules)
+      // {
+        example-repo =
+          (import (self + /examples/dream2nix-repo) {
+            dream2nixSource = self;
+            inherit pkgs;
+          })
+          .hello;
+        example-repo-flake =
+          (importFlake (self + /examples/dream2nix-repo-flake/flake.nix)).packages.${system}.hello;
+      };
   };
 }
diff --git a/modules/flake-parts/lib.nix b/modules/flake-parts/lib.nix
index 83a4f0b4..cdcf3f78 100644
--- a/modules/flake-parts/lib.nix
+++ b/modules/flake-parts/lib.nix
@@ -13,9 +13,11 @@
     packagesDir,
     ...
   }: let
+    projectRoot = toString args.projectRoot;
+    packagesDir = toString args.packagesDir;
     packagesDirPath =
-      if ! builtins.isString packagesDir
-      then throw "packagesDir must be a string"
+      if lib.hasPrefix projectRoot packagesDir
+      then packagesDir
       else projectRoot + "/${packagesDir}";
     forwardedArgs = builtins.removeAttrs args [
       "projectRoot"
@@ -36,7 +38,7 @@
                 {
                   paths.projectRoot = projectRoot;
                   paths.projectRootFile = projectRootFile;
-                  paths.package = "/${packagesDir}/${module}";
+                  paths.package = packagesDir + "/${module}";
                 }
               ];
           })
diff --git a/tests/nix-unit/test_paths/default.nix b/tests/nix-unit/test_paths/default.nix
new file mode 100644
index 00000000..6a2e374e
--- /dev/null
+++ b/tests/nix-unit/test_paths/default.nix
@@ -0,0 +1,84 @@
+{
+  pkgs ? import <nixpkgs> {},
+  lib ? import <nixpkgs/lib>,
+  dream2nix ? (import (../../../modules + "/flake.nix")).outputs {},
+}: let
+  eval = module:
+    (lib.evalModules {
+      modules = [
+        dream2nix.modules.dream2nix.core
+        module
+      ];
+      specialArgs = {
+        inherit dream2nix;
+        packageSets.nixpkgs = pkgs;
+      };
+    })
+    .config;
+in {
+  test_package_in_root_1 = let
+    config = eval {
+      paths.projectRoot = "${./.}";
+      paths.package = "${./.}";
+    };
+  in {
+    expr = {inherit (config.paths) projectRoot package;};
+    expected = {
+      projectRoot = "${./.}";
+      package = "./.";
+    };
+  };
+
+  test_package_in_root_2 = let
+    config = eval {
+      paths.projectRoot = "${./.}";
+      paths.package = "./.";
+    };
+  in {
+    expr = {inherit (config.paths) projectRoot package;};
+    expected = {
+      projectRoot = "${./.}";
+      package = "./.";
+    };
+  };
+
+  test_package_in_subdir_1 = let
+    config = eval {
+      paths.projectRoot = "${./.}";
+      paths.package = "${./.}/package";
+    };
+  in {
+    expr = {inherit (config.paths) projectRoot package;};
+    expected = {
+      projectRoot = "${./.}";
+      package = "./package";
+    };
+  };
+
+  test_package_in_subdir_2 = let
+    config = eval {
+      paths.projectRoot = "${./.}";
+      paths.package = "./package";
+    };
+  in {
+    expr = {inherit (config.paths) projectRoot package;};
+    expected = {
+      projectRoot = "${./.}";
+      package = "./package";
+    };
+  };
+
+  test_package_in_subdir_3 = let
+    self = /nix/store/some/path;
+    config = eval {
+      paths.projectRoot = self;
+      paths.package = self + /package;
+    };
+  in {
+    expr = {inherit (config.paths) projectRoot package;};
+    expected = {
+      projectRoot = self;
+      package = "./package";
+    };
+  };
+}