How to Make a Waterfall Chart in Excel (Modern Method + Legacy)

If you’re explaining how one number became another number — how January’s revenue turned into December’s, how gross profit became net income, how the budget became the overspend — a waterfall chart is the right tool, and Excel has had a native one since 2016. You don’t need helper columns, invisible bar tricks, or error-bar gymnastics. Most tutorials still teach those workarounds because they were written when the workarounds were necessary. They aren’t anymore.

Here’s the modern method first. The legacy method is at the bottom, clearly labelled, for the one situation where you still need it: Excel 2013 or earlier.

The Modern Method: Excel’s Native Waterfall Chart

You need three things: your data in two columns, the Insert tab, and one setting that almost everyone misses. Total build time is about two minutes.

Step 1: Set Up Your Data

A waterfall chart wants a simple two-column layout: labels on the left, values on the right. Positive numbers rise, negative numbers fall. Include your starting and ending totals as rows in the data — don’t calculate them off to the side.

A profit bridge looks like this:

HomeInsertPage LayoutFormulas

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Category	Amount
Revenue	842,000
Cost of Goods Sold	-318,000
Gross Profit	524,000
Salaries	-196,000
Marketing	-84,000
Overheads	-61,000
Operating Income	183,000

Note that Gross Profit and Operating Income are typed in as actual values, not left for the chart to compute. Excel’s waterfall chart does not calculate subtotals for you — it plots exactly what you give it. That design decision causes the single most common waterfall problem, which we’ll fix in Step 3.

Step 2: Insert the Chart

Select both columns, including the headers.
Go to Insert, and in the Charts group click the Insert Waterfall, Funnel, Stock, Surface, or Radar Chart icon (it looks like a small waterfall).
Choose Waterfall.

Excel drops the chart onto the sheet. It will look almost right — and “almost” is doing heavy lifting, because your subtotal columns are floating in mid-air.

Step 3: Fix the Totals (the Step Everyone Misses)

Excel has no way of knowing that “Gross Profit” and “Operating Income” are running totals rather than more changes, so it stacks them on top of the previous value like everything else. The result is a chart that’s numerically wrong.

The fix:

Click once on any column to select the whole series.
Click again on a total column (e.g., Gross Profit) so only that column is selected.
Right-click and choose Set as Total — or press Ctrl+1 and tick Set as Total in the Format Data Point pane.
Repeat for every total and subtotal column.

Grounded totals drop to the axis and recolor to the “Total” series color. If your waterfall ever looks inflated or the ending bar doesn’t touch the ground, this setting is the culprit ninety percent of the time.

Step 4: Format It Properly

The default output is serviceable. Five minutes of formatting makes it presentable:

Colors. Click the legend, then click one legend entry (Increase, Decrease, or Total), press Ctrl+1, and change the fill. Convention says green or blue for increases, red for decreases, gray or navy for totals. Fight convention at your own risk — your audience reads red as bad whether you like it or not.
Connector lines. The thin lines linking each bar to the next are on by default and worth keeping — they carry the “running total” story. Toggle them under Format Data Series > Series Options > Show connector lines. If they clash with gridlines, delete the gridlines instead.
Data labels. Turn them on (Chart Elements > Data Labels). A waterfall without numbers forces the reader to guess magnitudes, which defeats the purpose.
Legend. Excel labels the series Increase, Decrease, and Total. Those defaults are fine; if the color coding is obvious, delete the legend entirely and reclaim the space.

That’s the whole modern method. If your chart later stops reflecting new data, that’s a different problem with its own set of fixes — see Excel Chart Not Updating? 7 Fixes That Actually Work.

What the Native Waterfall Can’t Do

Honesty section. The native chart type is the right default, but it has real limitations:

Totals are manual. Every subtotal must be typed into the data and flagged with Set as Total. If you restructure the data, re-check your totals — the flags can silently detach.
No secondary axis, no combo. You can’t overlay a line on a native waterfall or move it to a secondary axis. If you need that, you’re back to a legacy build.
Limited per-bar formatting. You format Increase, Decrease, and Total as groups. Individually recoloring one specific bar for emphasis is possible (select the single point, Ctrl+1) but fiddly, and resets easily.
It’s a chart type, not a template. The styling doesn’t travel between workbooks unless you save it as a chart template.

None of these are reasons to avoid the native chart for standard bridge reporting. They’re reasons to know where the edges are.

Legacy Method: Stacked Columns (Excel 2013 and Earlier)

If you’re on Excel 2013 or older — or you need a waterfall inside a combo chart — the native type doesn’t exist for you, and you build it manually with a stacked column chart and an invisible base series.

The concept: each floating bar is really a stacked column with a transparent spacer underneath it. The spacer (“Base”) lifts each visible bar to the right height.

Add three helper columns next to your labels: Base, Decrease, Increase.
For each row, split the value: increases go in the Increase column, decreases (as positive numbers) go in the Decrease column.
The Base for each row is the running total before that row’s change for increases, or after it for decreases. In practice: Base = previous Base + previous Increase − current Decrease. Fill it down and sanity-check a couple of rows by hand.
Select labels plus the three helper columns and insert a Stacked Column chart.
Select the Base series, press Ctrl+1, and set Fill to No fill and Border to No line. Delete its legend entry (click the legend, click the Base entry, press Delete).
Color the Increase and Decrease series, tighten the gap width to around 30–50%, and add data labels to the visible series only.

It works, and it’s how everyone did it for two decades. It’s also brittle: one wrong Base formula and the whole bridge lies to you, quietly. If you’re on any Excel released since 2016, use the native chart and keep the helper-column method as trivia.

Working in Google Sheets instead? The process is different but the chart type is also native there — see How to Make a Waterfall Chart in Google Sheets.

Five Waterfall Mistakes That Undermine the Chart

Building the chart is mechanical. Building one that a room trusts takes judgment. These are the failures that appear most often in real decks:

1. Unflagged totals. Worth repeating because it’s the top offender: a subtotal left floating overstates your ending position and someone in the audience will catch it. Check every total before the chart leaves your machine.

2. Too many categories. Past roughly eight to ten bars, the eye can’t hold the running total. Consolidate small items into an “Other” bar — you can always break it out in a second, subordinate waterfall if someone asks. One clear bridge beats one exhaustive one.

3. Mixing signs by accident. A cost entered as a positive number becomes an increase, and the bridge silently inflates. Sanity-check: does the last bar match the ending total you can compute by hand? If not, hunt for a sign error before blaming Excel.

4. Sorting the bars. Waterfall order carries meaning — usually the sequence of a P&L or a timeline. Reordering bars “biggest first” the way you might with a bar chart destroys the narrative logic. If magnitude ranking is the story, you wanted a bar chart, not a waterfall.

5. Decorative axis tricks. Truncating the value axis or logging it makes the relative bar heights lie about relative impacts, and relative impact is the entire message of this chart type. Leave the axis honest and let small bars look small.

Reading a Waterfall Out Loud

A quick presentation note, because the chart is only half the job. A waterfall narrates left to right: state the starting bar, walk the changes in order (“we started at 842, cost of goods took out 318, leaving gross profit of 524…”), and land on the final total. Resist jumping to the ending number first — the sequential walk is what a waterfall does that a table of variances can’t, and audiences follow it effortlessly when you narrate in the chart’s own order. If you find yourself skipping bars while presenting, that’s the chart telling you those bars belong in “Other.”

When to Use a Waterfall (and When Not To)

Use a waterfall when the story is how a starting value became an ending value through a sequence of additions and subtractions. Profit bridges, budget variance walks, headcount movements, cash flow progressions, month-over-month revenue builds. If a finance director asks “what happened between Q1 and Q2,” a waterfall is the answer rendered as a picture.

Don’t use one for plain comparisons between categories (that’s a bar chart), composition of a whole at one point in time (part-to-whole charts), or trends over many periods (line chart). A waterfall with fifteen categories stops being a bridge and starts being a hedge maze. If you’re not certain the waterfall is right for your data, run it through Which Chart Should You Use? A Decision Guide by Data Type before you commit.

FAQ

What Excel versions have the native waterfall chart? Excel 2016 and later on Windows and Mac, plus Excel for Microsoft 365 and Excel for the web. Excel 2013 and earlier require the legacy stacked-column method.

Why are my totals floating instead of starting from zero? You haven’t flagged them. Double-click the total column and tick Set as Total in the Format Data Point pane. Excel never assumes a value is a total — you must tell it, every time.

Can Excel calculate the subtotals in a waterfall automatically? No. Enter subtotals as values (or formulas) in your source data and mark them as totals in the chart. The chart plots your data; it doesn’t do arithmetic on it.

How do I handle a running total that goes negative? The native chart handles it automatically — bars simply cross the axis. This was genuinely painful with the legacy method, and it’s one of the strongest arguments for using the native type.

Is a bridge chart the same as a waterfall chart? Yes. “Bridge chart” is the finance-world name, “waterfall” is the Excel name. Same chart, different meeting rooms.

Can I save my waterfall formatting for reuse? Right-click the finished chart and choose Save as Template to create a .crtx file you can apply to future charts. Or skip the setup entirely and start from our free waterfall chart template.