When to use a waterfall chart (and how to make one)

If you work in a data-heavy career like consulting or finance, you’re probably familiar with Waterfall charts. But what you might not know is how to use them.

Generally speaking, they’re good in two situations.

The first is when you want to show how to get from one value to another. In this chart from Booz Allen they show where their margins are now, and where they’d like their margins to be in 4 years. And by putting this in a waterfall chart they’re able to clearly show the path to get there.  

The second situation is when you want to provide a breakdown of values. This chart from BCG shows how Ford contributes to US GDP. If they wanted to, they could have put this data into a single stacked column, or even a pie chart, but by putting it in a waterfall chart like this, they’re able to emphasize each individual category.

The easiest way to build a waterfall chart is with a tool like Ampler or Think-Cell. But you can also build them in Excel pretty easily too. Just add your data into a table, select Waterfall from the charts menu, then click on your total column and select “Set as Total”.

Waterfall charts don’t work in all situations, but when you use them correctly, they can be really effective.

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