diff --git a/pkgs/tools/compression/pbzip2/default.nix b/pkgs/tools/compression/pbzip2/default.nix
index 6b647a2675cb..352b4db6a341 100644
--- a/pkgs/tools/compression/pbzip2/default.nix
+++ b/pkgs/tools/compression/pbzip2/default.nix
@@ -15,7 +15,7 @@ stdenv.mkDerivation rec {
 
   preBuild = "substituteInPlace Makefile --replace g++ c++";
 
-  installFlags = "PREFIX=$out";
+  installFlags = "PREFIX=$(out)";
 
   meta = with stdenv.lib; {
     homepage = http://compression.ca/pbzip2/;