Waterfall Chart in Power BI

A Waterfall Chart is a visual tool that shows how a starting value changes step by step through increases and decreases to reach a final value. A waterfall chart helps you visualize the cumulative effect of each change one at a time, similar to stacking blocks one on top of another, which shows the simple impact of each change in order. It is useful for visualizing changes in a metric, such as sales, profit, or expenses, hierarchically over time or categories. In this blog, you will learn the definition of Waterfall charts, how and when to use them, their benefits, and a step-by-step procedure for creating Waterfall charts in Power BI.

Table of Contents:

• What is a Waterfall Chart in Power BI
• When to Use a Waterfall Chart in Power BI
• Advantages of Waterfall Charts in Power BI
• Steps to Create a Waterfall Chart in Power BI
• Common Mistakes to Avoid
• Best Practices
• Conclusion

What is a Waterfall Chart in Power BI?

The waterfall chart in Power BI is used to depict the increase or decrease in values over time or across different categories, as well as by year. In a waterfall chart, the y-axis represents the data values (or changes), and the x-axis typically represents time or categories. This chart is used to illustrate the way an initial amount gets impacted (positively or negatively) by a series of sequential changes. It is particularly useful when looking at how things change over time, as it enables a reader to see how the sequence of each positive or negative step made an impact on the outcome.

This chart uses columns to show either an increase or a decrease in value.

Characteristics of a Waterfall Chart:

• The first and last columns suggest a total start and total end.
• Intermediate columns suggest positive (increases) and negative (decreases).
• Columns are connected by a floating line for a stepwise effect.

When to Use a Waterfall Chart in Power BI?

• Tracking the total impact of a series of data points: It tracks different changes and adds them together over time, such as a financial report demonstrating how revenues and expenses affect net profit.
• Indicating the contribution of sub-categories: Understanding the total revenue of a business as it relates to the contributions of departments or products.
• Breaking down financial data and budgets: When you do your financial reports, you may break down distortions of profits and losses from “initial value” to “end value”.
• Showing changes over some time: Whether it is a month, quarter, or year, waterfall charts display the value of data in consecutive steps over time.

Typical scenarios include:

• Profit and loss review
• Sales performance in a month or quarter
• Budget vs. actual value
• Changes in inventory and supply chain

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Advantages of Waterfall Charts in Power BI

• Easy to Understand: Waterfall charts allow viewers to see how a value changes step-by-step, so that even a non-technical user can follow along.
• Shows Key Changes Clearly: Waterfall charts clearly show which changes resulted in an increase or a decrease, so that you can quickly understand what caused the change.
• Great for Financial Data: Waterfall charts effectively communicate broken-down profit, expense, and other financial values.
• Helps in making Better Decisions: Waterfall charts highlight where values go up or down, which can guide a manager’s attention to what is working or what needs to improve.
• Visualizes the Whole Picture: Waterfall charts allow users to see the starting point, intermediate changes, and the final result.

Steps to Create a Waterfall Chart in Power BI

Let us consider the following dataset, which will be used to create a waterfall chart.

Step 1: Prepare Your Data

You can import this data into Power BI. In this case, we’ll have two columns:

• Month: Time period (January, February, March, etc.)
• Sales: The sales value for that month.

If you’re using Power BI Desktop:

• Open Power BI Desktop.
• Click on Get Data > Enter Data.
• Copy and paste the data into the table, or manually enter the values in the table input dialog.

This is what the Sales table looks like when it is loaded into Power BI.

Step 2: Add a Month Index

Since Power BI doesn’t inherently understand month order from text like “January”, “February”, etc., we need to manually define their order:

Go to the Modeling tab → New column, and enter the DAX formula:

MonthNumber =
SWITCH(
    TRUE(),
    [Month] = "January", 1,
    [Month] = "February", 2,
    [Month] = "March", 3,
    [Month] = "April", 4,
    [Month] = "May", 5,
    [Month] = "June", 6
)

Step 3: Calculate Sales Change

Now, create another column to compute the change in sales compared to the previous month:

Go to the Modeling tab → New column, and enter the DAX formula:

Sales Change =
[Sales] -
CALCULATE(
    MAX([Sales]),
    FILTER(
        'TableName', // Replace with your actual table name
        'TableName'[MonthNumber] = EARLIER('TableName'[MonthNumber]) - 1
   )

)

Note: Replace ‘TableName’ with the actual name of your table (e.g., SalesData)

After adding these two new columns, your table will have two new columns:

As you can see, MonthNumber and Sales Change are two new columns.

Step 4: Insert the Waterfall Chart

Once your data is ready:

• In the Visualizations pane, select the Waterfall Chart icon (it looks like a bar chart with columns stepping up and down).
• The chart will appear on the canvas.

Step 5: Assign Data to the Waterfall Chart

Now, you’ll need to assign data fields to the appropriate areas in the Fields pane:

• Category: Drag the Month field here, and ensure it is sorted by the MonthNumber column to maintain chronological order
• Y-Axis/Values: Drag the Sales Change here. This will show the values for each month.

Result:

Explanation: Here, your Waterfall chart will:

• Start from the first available month.
• Show the change from one month to the next.
• Display drops (e.g., in April) and rises clearly.
• End with the cumulative net value.

Common Mistakes to Avoid

• Incorrect Month Order: Always use a numeric index for months when sorting the months correctly.
• Using Total Sales, Not Change: Waterfall charts expect that you are translating change/delta values, not total absolutes.
• Not Replacing Table Names in DAX: If you use ‘TableName’ in your measure instead of the actual table name, errors will arise.
• Overcrowding of the Chart: Too much data makes the view unclear – stick to the key items.
• No Labels/Tooltips: If there are no tooltips or labels on the visual, there is no way for users to derive close precision insights.

Best Practices

• Add Tooltips: Show exact values when hovering to make data clearer.
• Format Axes: Make axis labels easy to read and adjust the scale if needed.
• Use a Cumulative Line: Native waterfall visuals don’t support trend lines, but you can use a combo chart (line and clustered column) or import a custom visual from the marketplace to achieve this.

Conclusion

Waterfall charts in Power BI are essential for showing how values rise or fall across time or categories. They make it easy to track changes, like monthly sales shifts, and understand how each part contributes to the total. These charts are useful in financial, operational, and business reports, helping you see trends and impacts. With their clear, step-by-step layout and visual flow, Waterfall charts let you tell a simple, effective, and insightful story behind your data, making it easier to explain key changes.

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Waterfall Charts in Power BI – FAQs