This entry is part of the Chart Index, the reference library for the Chart Design Field Guide.

The waterfall chart shows how a starting value becomes an ending value through a series of additions and subtractions. Each bar represents an increment or decrement; consecutive bars are connected so the eye follows a step-wise path from left to right. The form is the natural choice for any bridge analysis — revenue waterfall, headcount change, P&L attribution — where the question is what got us from here to there?

It is also one of the most overengineered chart types in business reporting. The combination of floating bars, connecting lines, and bidirectional values invites visual complexity, and most tools produce noisy defaults. A clean waterfall demands disciplined design: quiet colours, clear baselines, direct labels.

What it is

A waterfall chart maps a sequence of changes to position along the x-axis and quantitative magnitudes to bar lengths. The first bar shows the starting value, anchored to zero. Each subsequent bar floats — its baseline is the running total — and is coloured to indicate whether it is a positive or negative change. The final bar shows the ending value, also anchored to zero, summarising the cumulative result.

Operating profit walk — FY 2025AUD m · revenue → cost adjustments → final profit · 9 bridges

A starting revenue, several positive bars (gross margin, recoveries, settlements), several negative bars (cost increases, write-downs, FX), and a final ending bar. The eye traces the path; each step says here is what changed, and here is the running total.

When to use it

Waterfall charts are the right choice when:

  • The data tells a bridge story: starting value, changes, ending value.
  • The reader's question is "what contributed to the change, and by how much?"
  • The change components are few enough to label (5–12 bridges; rarely more).
  • The components are distinguishable — clear positives and negatives, no ambiguous categories.
  • The form is financial, operational, or analytical — where the bridge concept is familiar.

When not to use it

  • No additive structure. If the changes do not compose to the ending value, the form is misleading. Use grouped bars instead.
  • Many small changes. Twenty tiny bridges produce a forest of indistinguishable strips. Aggregate into themed groups.
  • Changes that overlap or interact. When bridges affect each other (FX impact depends on revenue mix), the additive assumption breaks. Document the assumption.
  • Audiences unfamiliar with the form. Non-finance readers may not recognise the floating-bar convention. For general audiences, a labelled bar chart with annotations is safer.

Design principles

Use a clear two-colour scheme

Positive changes in one colour, negative in another. The convention is typically teal / blue for positive, magenta / red for negative, but any two-colour scheme works if it is consistent and not loud. Use desaturated tones — saturated red and green make the chart look like a heat map.

Anchor totals to zero, float increments

The starting and ending bars sit on the baseline. The intermediate bars float — their bottom is the previous running total. This visual distinction (anchored = total; floating = bridge) is the form's most important convention.

Draw connecting steps

A thin horizontal line connecting the top of one bar to the bottom of the next bar makes the bridge sequence visible. Without it, the bars look disconnected. With it, the eye follows the staircase from start to end.

Waterfall anatomy — anchored totals, floating bridges, step connectors
100Start+25+ A+18+ B-12− C+8+ D-22− E117End
Each bridge is a floating bar coloured by direction; the totals at each end are anchored to zero; thin steps connect bar tops.

Direct-label every bar with its value

Place the change value above each bridge bar (or below, for negatives). Place the absolute totals above each anchored bar. The reader's eye lands on the bar and reads the number without scanning to an axis.

Order bridges logically, not by magnitude

A waterfall is not a ranked list. The bridges should appear in their meaningful sequence — operational walk in chronological or functional order, attribution analysis grouped by category. Sorting by magnitude destroys the narrative.

Quiet the gridlines

A waterfall is busy enough with its bars and connectors. Drop the horizontal gridlines or keep them very faint. Direct-labeling every bar removes the need for an axis to estimate values.

Handle very large adjustments carefully

A single bridge that swamps all others — a £50m write-down in a £100m chart — distorts every other bar into a sliver. Consider a broken-axis or two-panel layout, or annotate the outlier with its value and let it dominate.

Anatomy

The Composition of a Waterfall Chart
100150200142Opening+38+ Gross margin+8+ Settlements-22− Cost growth-18− Write-down+6+ FX gain154ClosingOPENING ANCHORFLOATING BRIDGESCLOSING ANCHOR
An anatomical guide

A waterfall's anatomy is anchored totals at each end, floating bridges in the middle, and step connectors that trace the running balance. The opening anchor sets the start; the closing anchor reconciles to the end.

  • Stacked bar — the form a waterfall replaces when the additive sequence does not need its narrative shape.
  • Variance bar chart — a simpler form for showing positive and negative deviations from a baseline.
  • Sankey diagram — for flows where each node has multiple inputs and outputs, not just sequential bridges.
  • Bridge analysis in financial modelling — the analytical concept the chart visualises.
  • Step chart — similar visual rhythm for time-series stepwise data; different semantics.

Reading list

  • Knaflic, C. (2015). Storytelling with Data. The waterfall as a narrative chart form.
  • Few, S. (2012). Show Me the Numbers. On clarity in financial bridge displays.
  • McKinsey & Company internal training (1980s–). The waterfall as the strategy consulting standard.