diff --git a/Dockerfile b/Dockerfile
index 12ede0c..f3dbdf8 100644
--- a/Dockerfile
+++ b/Dockerfile
@@ -7,7 +7,8 @@ ENV PYTHONUNBUFFERED=1 \
     PIP_NO_CACHE_DIR=1 \
     PIP_DISABLE_PIP_VERSION_CHECK=1 \
     UV_PROJECT_ENVIRONMENT=/app/.venv \
-    ENVIRONMENT=production
+    ENVIRONMENT=production \
+    DATA_DIR=/data
 
 # Set working directory
 WORKDIR /app
@@ -18,14 +19,18 @@ COPY --from=ghcr.io/astral-sh/uv:latest /uv /usr/local/bin/uv
 # Copy dependency files
 COPY pyproject.toml README.md ./
 
-# Install Python dependencies
-RUN uv sync --no-dev
+# Copy application code
+COPY src/ ./src/
+
+# Install Python dependencies including all optional dependencies
+# This makes the image self-contained and ready for any configuration
+RUN uv sync --no-dev --all-extras
 
 # Add virtual environment to PATH
 ENV PATH="/app/.venv/bin:$PATH"
 
-# Copy application code
-COPY src/ ./src/
+# Create data directory for SQLite database
+RUN mkdir -p /data && chmod 777 /data
 
 # Add healthcheck
 HEALTHCHECK \
@@ -39,6 +44,9 @@ HEALTHCHECK \
 # Expose port
 EXPOSE 8000
 
+# Declare volume for persistent data
+VOLUME /data
+
 # Set entrypoint to restrict usage to uvicorn with this specific app
 ENTRYPOINT ["uvicorn", "src.baby_monitor.main:app"]
 
diff --git a/docker-compose.yml b/docker-compose.yml
index 61edb06..bd4e678 100644
--- a/docker-compose.yml
+++ b/docker-compose.yml
@@ -1,5 +1,3 @@
-version: "3.8"
-
 services:
   app:
     build:
@@ -10,7 +8,26 @@ services:
     volumes:
       # Mount source code for hot-reloading during development
       - ./src:/app/src:ro
+      # Persist database to local directory
+      - ./data:/data
     environment:
       - ENVIRONMENT=development
+      # Optional: Override admin credentials for development
+      # - ADMIN_USERNAME=admin
+      # - ADMIN_PASSWORD=devpassword
+      # Optional: Use Redis for token storage (uncomment redis service below)
+      # - REDIS_URI=redis://redis:6379/0
     command: ["--host", "0.0.0.0", "--port", "8000", "--reload"]
     restart: unless-stopped
+
+  # Uncomment to enable Redis token storage
+  # redis:
+  #   image: redis:7-alpine
+  #   ports:
+  #     - "6379:6379"
+  #   volumes:
+  #     - redis-data:/data
+  #   restart: unless-stopped
+# Uncomment if using Redis
+# volumes:
+#   redis-data: