How to Make a Waterfall Chart: A Step-by-Step Guide

Published October 11, 2026

Free tool: Waterfall Chart Maker→

A waterfall chart shows how you get from one number to another. It starts with a value, adds each increase and subtracts each decrease as a floating bar, and ends with the final total, so you can see exactly what drove the change. That makes it a favorite for profit bridges, cash flow, budgets and any "why did this number move?" question. This guide explains how waterfall charts work and how to build one with the free Waterfall Chart Maker.

What a waterfall chart is used for

• Profit bridges: from revenue to net profit, one cost at a time.
• Year-over-year changes: from last year's profit to this year's, split into price, volume and cost effects.
• Cash flow: from the opening cash balance to the closing one.
• Budget vs actual: which lines came in over or under budget.
• Headcount or inventory: starting level, additions, departures, ending level.

The parts of a waterfall chart

• The starting bar rises from zero to the starting value.
• Each change is a floating bar. It begins where the previous step ended, rising for an increase and dropping for a decrease, so its length shows the size of the change.
• The ending bar rises from zero to the final total, so you can compare it with the start.
• Colors tell increases, decreases and totals apart.

Worked example: from revenue to net profit

A small business had $120,000 of revenue last quarter. Here's how it gets from there to its profit:

Every running total is the previous one plus the change. In the chart, the cost of goods bar hangs from $120,000 down to $72,000, salaries from $72,000 down to $42,000, and so on. One glance shows that cost of goods and salaries are the two big reasons why $120,000 of revenue becomes $18,750 of profit.

How to make a waterfall chart with Graph Maker

1. Open the Waterfall Chart Maker.

2. Add a chart title and a y-axis title, such as "Quarterly Profit Bridge" and "Amount".

3. Enter the starting point. Type a label in Starting Label ("Revenue") and the amount in Starting Value (120,000). Thousands separators are fine.

4. List the changes in Changes, one per line: a label, a colon, then a positive or negative amount:

   Cost of goods sold: -48,000
   Salaries: -30,000
   Rent: -12,000
   Marketing: -8,000
   Other income: 3,000
   Taxes: -6,250
   

5. Keep Add an ending total bar ticked and name it in Total Label, such as "Net profit".

6. Choose how values appear. Show values on the bars prints each amount on its bar, and Value Prefix adds a currency symbol such as $ (or leave it empty for counts).

7. Pick the colors for increases, decreases, and the start and total bars. The defaults are blue for increases and red for decreases, a pair that stays distinct for most people with color vision deficiency.

8. Check the step-by-step table under the chart, which lists every change and the running total, then download the chart as a PNG, JPG or SVG.

Tips for a clear waterfall chart

• Put the steps in a logical order. Follow the order of your income statement or budget, or put the biggest effects first when you're explaining a change.
• Keep it to about 5 to 10 steps. Group small items into "Other" so the chart doesn't turn into a staircase of slivers.
• Show the values. Labels on the bars save readers from estimating the size of each step.
• Use the same units throughout. Mixing thousands and millions, or currencies, makes the bars meaningless.
• Name the start and end clearly, including the period: "Revenue, Q3" to "Net profit, Q3".
• Let the colors do one job. Increases one color, decreases another, totals a neutral third.

Waterfall chart vs other charts

A bar graph compares separate amounts but doesn't show how they add up. A stacked bar shows the parts of a total, but not the order in which they add or subtract. A waterfall chart is the one that tells the story step by step, which is why it's common in financial reports and presentations.

Frequently asked questions

What is a waterfall chart?

A chart that shows how a starting value turns into an ending value through a series of increases and decreases, each drawn as a floating bar that starts where the previous one ended. It's also called a bridge chart.

Why are some bars floating?

Because each change starts from the running total so far, not from zero. Only the starting and ending totals are anchored at zero.

Can a waterfall chart go below zero?

Yes. If the decreases are larger than what came before, for example when costs exceed revenue, the running total drops below zero and the bars continue below the zero line.