What to consider when creating waterfall charts

Waterfall charts show how a total is made up — either over time ("We started the year with 100 customers, then won 40 in Q1 and 10 in Q2, and now have 150") or by category ("Expenses are $4.2m for marketing, $13m for HR"). They're also known as bridge charts or cascade charts. While very helpful especially in a business/finance context, they come with some challenges. This article explains when to use waterfall charts and how to design them well.

When to use waterfall charts

Use waterfall charts to show the path between two values. Most waterfall charts focus on the journey, not the destination. How did we get from the value of the first column to the value of the last? What happened along the way? What helped the last column to be that high, and what held it back from being higher? Waterfall charts plot those gains and losses far more intuitively than a simple column or line chart is able to.

Use waterfall charts when the parts are as important as the total. Sometimes, waterfall charts are used to show the parts of a whole. Unlike “gains and losses” waterfall charts, these have no negative values and only one total. Consider a waterfall chart for a breakdown like this when the total is as important as the parts.

If the total can be ignored, consider a simple bar chart. While there's no real alternative to a waterfall chart when you have both positive and negative values, there are lots of alternatives when you're simply showing the parts of a whole. A bar chart is often the best choice: because every bar shares a baseline, your audience can compare the parts easily. Labels in a bar chart are also easier to read than in a waterfall chart, which can only include so many columns before labels overlap or need to be rotated (more on that below). When you have numbers close to 25%, 50%, or 75%, a pie or donut chart can also work well.

If you want to compare multiple part-to-whole breakdowns, consider a stacked bar or stacked column chart. Waterfall charts like to be alone: four of them next to each other will quickly look overwhelming. They don’t work as well as small multiple charts as line or column charts do. If all your parts are positive, consider a space-efficient stacked bar (or stacked column) chart instead.

How to create better waterfall charts

Order your columns logically. The total at the end will always be the same, no matter how you order the gains and losses. To make them easier to compare, most waterfall charts group gains and losses together and sort them by size. But which should come first, gains or losses? That order tells a story: do the gains first push your number well above the starting value, only for the losses to spoil the good news? Or do the losses drag the starting value down, before the gains rescue it from down there?

Think a second or two about which order your audience is used to. Often, that's "gains first, then losses, sorted by size," even though the other way around is almost always more space-efficient.

For a simple breakdown of a total, the biggest categories usually come first. And if your columns are chronological — years, quarters, months — sort them chronologically.

Consider adding subtotal columns. Waterfall charts often have start and end totals that sit on the baseline. But sometimes it can make sense to add totals in between, too. You can use them to show “This is what our total would be if the following gains and losses didn’t happen” — for example, the result after the first of two quarters.

If your difference columns are tiny compared to the totals, zoom in. A waterfall chart is useless if the gains and losses are too small to make sense of. If that’s the case, consider not showing the baseline. Your audience won’t be able to compare the height of the gains and losses with the height of the totals anymore — but they'll see the journey between the totals more clearly. To make it obvious that the baseline is gone, either turn the totals into floating points or fade them out. In Datawrapper, you can do both.

Don’t add axis break indicators for your totals. You might want keep the baseline but use a break indicator to signal that the totals aren't shown at their full height. It sounds like a good idea, but it doesn’t work: your audience will notice the indicator, but their brains will still instinctively compare the height of that broken column with the height of the gains and losses. (Which is exactly what you want to avoid.)

Make your labels readable. Depending on the chart width and the length of your labels, your waterfall chart can fit more or fewer column labels: If it has to work on mobile and the labels are long, five columns can already be too many. On a wide presentation slide, you might easily fit fifteen columns if the labels are just showing a year.

To make your waterfall chart work without overlapping or rotating labels, you can

shorten the labels,
group categories together (into an "Other" category, for example), or
switch to a vertical waterfall chart, which makes long labels easy to read. (You do give up the nice intuitive read of losses falling and gains rising.)

Add labels for all numbers. If you have the space to label what a column shows (e.g. “Hires”, “Q1”, etc.), you almost always have space to label the value too. Those value labels are especially important in waterfall charts, where it’s hard for your audience to judge and compare the height of floating rectangles that don’t share a baseline. If you do label all columns, you'll get a cleaner look by hiding all vertical grid lines and labels.

Add connecting lines. A line showing where one "flying brick" ends and the next begins makes the flow of your waterfall chart a little easier to follow. Especially where negative and positive columns meet, they’re helpful for showing how each value adds to or subtracts from the one before. That said, if the columns are sorted (see above) or are just going in one direction anyway, hiding the connecting lines can make for a cleaner look.

Use three colors (and three colors only) for the columns. In waterfall charts that show gains and losses, colors have an important job: they tell your audience which columns are gains (green), losses (red), and totals (a neutral color like gray or blue). Anyone familiar with waterfall charts will expect these colors — so much so that a color legend often isn't necessary.

Consider how your colors are seen by colorblind readers. Certain combinations of red and green and gray and teal/pink will be indistinguishable to your colorblind readers. Use combinations like lime green/dark red or teal/red, if possible. To be sure, check your colors with a colorblind simulation.