Creating a Waterfall Chart in Excel: A Step-by-Step Guide

To create a waterfall chart in Excel for Microsoft 365 on Windows, put each step of the change in one column and its signed value in the next, select the data, then choose Insert > Insert Waterfall, Funnel, Stock, Surface or Radar Chart > Waterfall. Set the opening and closing balance bars as totals by right-clicking each bar and choosing Set as Total.

A waterfall chart shows how a starting amount changes through a sequence of positive and negative contributions to reach an ending amount. Excel builds the running balance between those bars, making the chart useful for explaining bridges such as last year’s profit to this year’s, a budget variance, inventory movement, or a project’s cumulative costs.

What a waterfall chart shows

Unlike a standard column chart, which places every column against the same baseline, a waterfall chart makes each change begin where the previous change ended. An increase rises from the prior running balance; a decrease falls from it. The result resembles a series of floating columns connected in order, with totals commonly shown as full-height bars from the baseline.

This layout helps explain the path behind a result, not just the difference between two endpoints. For example, a report might show an opening balance, several increases and decreases, and a final balance. Viewers can see which items contributed to the movement and whether gains offset losses. A waterfall chart does not establish why a change occurred; the categories and underlying data provide that explanation.

Prepare the source data

Use a simple two-column table: categories in the first column and the amount for each step in the second. Enter the steps in the order you want them to appear. Use positive numbers for increases and negative numbers for decreases. The first and last rows usually represent the opening and ending balances, while the intervening rows represent changes.

For example, a business starts with revenue of 100, gains 30, loses 12, and gains 8. The ending revenue is 126. Your table could look like this:

Starting revenue — 100
New sales — 30
Returns — -12
Price changes — 8
Ending revenue — 126

The figures are illustrative, and the units could be dollars, thousands of dollars, units, or another consistent measure. Keep the same units throughout the data. The ending value is 126 because 100 + 30 – 12 + 8 = 126. In Excel, the ending row is included as a displayed result, not another change to add to the running balance.

Put the headers above the data if you want Excel to use them as chart labels. Avoid blank rows inside the range, merged cells, and extra notes beside the table; they can make it harder to select a clean chart source. If the data comes from a larger worksheet, select only the category and value columns needed for the bridge.

Create the chart in Excel for Windows

Arrange the categories and values in adjacent columns, including the opening and ending rows.
Select the data range, including its column headers. For example, select A1:B6 if the headers are in row 1 and the five categories are in rows 2 through 6.
On the ribbon, choose Insert > Insert Waterfall, Funnel, Stock, Surface or Radar Chart > Waterfall.
Excel inserts a chart using the order and values in the selected range. Move or resize it by dragging the chart, or use the sizing handles.
Mark the opening and ending bars as totals, as described below, so they start at the baseline rather than floating as changes.

If the chart groups the information incorrectly, check that the category labels and values are in the expected two-column layout and that the selected range does not include unrelated cells. You can also select the chart and use Chart Design > Select Data to inspect or adjust its source range. The exact ribbon labels can vary slightly with window size or updates, but the Waterfall chart is in the Insert chart gallery in current Microsoft 365 for Windows.

On Excel for Mac, select the same kind of data and use the Insert tab’s Waterfall chart option; ribbon arrangement and wording can vary by release. Excel for the web may offer fewer chart-formatting controls than the desktop application. If a chart option or setting is unavailable in your version, open the workbook in the current desktop version of Excel. Older Excel releases may not include the built-in waterfall chart type.

Set opening, ending, and subtotal bars

Excel initially treats values as sequential changes. That is not the intended display for an opening balance or a final balance, which should appear as a full column from the chart baseline. Click the bar once to select the series, then click the specific bar again to select just that data point. Right-click it and choose Set as Total. Repeat for the opening and ending bars.

Use the same process for a subtotal that should show the running result at a particular stage. For example, a chart might show several monthly changes, then a quarter-end subtotal, followed by more changes and a year-end total. Setting the quarter-end point as a total visually separates the first group of changes from the next. A subtotal is a checkpoint, so confirm that its value matches the running balance at that point; Excel does not validate the business meaning of the number.

If the context menu does not show Set as Total, make sure you selected one bar rather than the entire series. Click once to select all bars, then click the desired bar again. A selection handle around a single bar is a useful sign that the individual point is selected.

Read and check the worked example

For the example, set Starting revenue and Ending revenue as totals. New sales increases the running amount from 100 to 130. Returns reduces it from 130 to 118. Price changes raises it from 118 to 126. The final total bar therefore reaches 126. This tells the same story as the arithmetic, but makes the contribution of each change visible.

Check the chart against the source table before sharing it. Add the positive changes, subtract the negative changes, and compare the result with the stated ending balance. If there are subtotals, verify each one against the running value up to that point. This simple check catches common mistakes such as entering a decrease as a positive number, omitting a row from the selected range, or treating a total as another change.

The vertical axis may not start at zero if Excel adjusts its scale to suit the data. That is normal for a chart made of floating changes, but readers should still be able to interpret the bars and the totals. If the scale makes comparisons confusing, select the axis and review its formatting options. Do not change the scale merely to make a result appear larger or smaller.

Format colors, labels, and connectors

Excel distinguishes increases, decreases, and totals using separate chart colors. To adjust them, select the chart and use the formatting controls available on the Chart Design and Format tabs, or right-click an individual point and choose Format Data Point. Color choices should make the categories easy to tell apart without implying a meaning your report does not use. For example, green and red are common choices, but they can be difficult for some readers to distinguish; labels or a high-contrast palette can help.

To add values to the bars, select the chart and choose Chart Design > Add Chart Element > Data Labels, then choose a placement that remains legible. Labels are most useful when the chart has only a few steps. With many categories, they can overlap or crowd the plot area. You can also add a descriptive chart title and format the vertical axis with appropriate number units, such as currency or percentages, when those match the source data.

Connector lines help show how one step leads to the next. If the chart includes them, keep them subtle enough that they do not compete with the bars. You can review the chart’s formatting options by selecting a connector or using the Format pane. For a concise business presentation, use a clear title, readable category labels, consistent number formatting, and only the data labels needed to support the point.

Common problems and how to fix them

The opening bar floats instead of starting at the baseline: Select that individual bar and choose Set as Total.
The ending bar is treated as a change: Set the final balance as a total too. Confirm it is the actual ending balance, not a second copy of the last change.
Increases and decreases appear reversed: Check the signs in the source values. Increases should be positive and decreases negative.
A category or value is missing: Use Chart Design > Select Data to check the selected range, and make sure the source table includes the relevant row.
Labels are cramped or unreadable: Widen the chart, shorten long category names, reduce the number of labels, or display values only where they add clarity.
The chart order is unexpected: Reorder the source rows. A waterfall follows the sequence of categories in its data; it does not automatically sort changes into a meaningful story.

A frequent misconception is that Excel will automatically know which rows are totals because they are labeled Total or Subtotal. Do not rely on the text in a category label: explicitly mark each total point with Set as Total. Another common mistake is adding the ending balance as though it were one more change. The ending row records the final result; it should not be added to the running balance.

Native chart or manual workaround?

The built-in Waterfall chart is generally the simplest choice when the workbook will be opened in a version of Excel that supports it. It handles the running steps and lets you mark totals directly. It is easier to maintain than constructing floating columns by hand, especially when source values change.

A manual stacked-column workaround can be useful when a recipient’s spreadsheet program does not support Excel’s native waterfall chart, or when you need more control over the underlying chart construction. That method typically uses helper values: one invisible series to position each change and another visible series for the increase or decrease. It requires careful calculations and formatting, and changes to the data can expose errors if the helper values are not updated correctly. It is not necessary for ordinary waterfall charts in current Excel.

For a simple comparison of categories against a shared baseline, a regular column or bar chart may be clearer. A waterfall is best when the sequence and cumulative effect matter. If a chart has many steps, several nested subtotals, or categories that need extensive explanation, a table alongside the chart can make the figures easier to audit.

Frequently Asked Questions

How do I make the first and last bars start at zero?
Select each bar individually, right-click it, and choose Set as Total. Apply the setting to the opening balance and the ending balance; do the same for any subtotal that should appear as a full-height result.

Can I make a waterfall chart in Excel without a template?
Yes. Arrange categories and signed values in two columns, select the range, and insert a Waterfall chart from the Insert tab. Excel creates the chart from the selected data, and you can mark totals afterward.

Why are my negative values showing as increases?
Check that decreases are entered as negative numbers and that the chart uses the intended value column. Also check whether a point was incorrectly set as a total, since totals do not behave like ordinary increases or decreases.

Can a waterfall chart show subtotals?
Yes. Select the relevant bar as an individual data point and choose Set as Total. Make sure the subtotal value represents the cumulative balance at that point in the sequence.

Does Excel update a waterfall chart when the data changes?
Yes, when the changed cells are within the chart’s source range, the chart updates with the source values. If you add rows outside the original range and they do not appear, adjust the source through Chart Design > Select Data or expand the selected data range.

Try it: the Percentage Formula Generator: percent of, percent change, increase and decrease, with the formula.

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Sources: Function behaviour and menu paths: Microsoft Support documentation for Excel. Method & sources

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