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.

The hero chart above walks operating profit from one financial year to the next. The opening bar stands on zero. Three revenue effects follow — volume and price push the balance up in green, mix pulls it down in red — and a teal subtotal drops back to zero to show where the balance stands after them. Then five cost effects, four of them down, and a closing bar that reconciles the whole walk: 142 plus the steps equals 138. The reader takes in the shape first — a climb, a plateau, a long descent — and only then the individual steps. Randomise the steps and every balance, subtotal and connector is recomputed from them.

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. Any two-colour scheme works if it is consistent and not loud; the house pairing is a green and a red of matched lightness, so that neither side of the ledger shouts. Totals take a third, neutral colour so the reader can tell an anchored bar from a floating one without reading the axis.

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.

Without connectors
Six bars, no steps between them. The floating bars read as a scatter of rectangles at odd heights; the reader has to work out that the bottom of each one is the top of the last, and the direction of each change is carried by colour alone.
With connectors
The same headcount walk with a dashed hairline from the end of each step to the start of the next. The eye now follows a staircase from the July total to the June one, and the running balance is legible at every step without the axis.

Use subtotals to break a long walk into chapters

A bridge with more than six or seven steps needs resting points. A subtotal bar drops back to the baseline and shows the balance so far, so the reader can check their arithmetic and the chart can be read as chapters: revenue effects, then cost effects; gross profit, then operating profit, then net.

A profit and loss walk with three subtotals
Revenue at the top, net profit at the bottom, and between them the cost lines grouped by the subtotal that follows them. Drawn horizontally so the eleven line items keep their full names. Each teal bar is a number the reader already knows from the accounts, which makes the chart checkable at three points rather than only at the end.

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.

The hero's steps sorted by size
The same nine effects, largest first. The arithmetic still closes, but the reader can no longer tell the revenue effects from the cost effects, the subtotal has lost its meaning, and the chart has become a bar chart that happens to float. Compare the hero, where the order is the story.

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 write-down worth a third of the opening balance — 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.

One step swamps the rest
A goodwill write-down of 96 million against operating effects in the single digits. The write-down is the story and deserves its height, but the five ordinary steps have become slivers a few pixels tall. Either annotate them with their values, or show the operating walk on its own panel and the write-down as a footnote.

Anatomy

The composition of a waterfall chart
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.
  • Tufte, E. (2001). The Visual Display of Quantitative Information. Data-ink and the case for quiet scaffolding.