Creating a Pareto Chart in Excel (Simple + Dynamic)

Watch Video – Creating a Pareto Chart in Excel

Pareto Chart is based on the Pareto principle (also known as the 80/20 rule), which is a well-known concept in project management.

According to it, ~80% of the problems can be attributed to about ~20% of the issues (or ~80% of your results could be a direct outcome of ~20% of your efforts, and so on..).

The 80/20 percentage value may vary, but the idea is that of all the issues/efforts, there a few that result in maximum impact. This is a widely used concept in project management to prioritize work.

In this tutorial, I will show you how to create:

  • A Simple Pareto Chart in Excel.
  • A Dynamic Pareto Chart in Excel.

Creating a Pareto Chart in Excel is very easy. All the trickery is hidden in how you arrange the data.

Let us take an example of a Hotel for which the complaints data could look something as shown below:Pareto Chart in Excel - Dataset

NOTE: To make a Pareto chart in Excel, you need to have the data arranged in an descending order.

Follow Along.. Download the Example FileDownload File

Creating a Simple Pareto Chart in Excel

Here are the steps:

  1. In the column adjacent to the data (# of complaints), enter the below formula:
    =SUM($B$2:B2)/SUM($B$2:$B$10)Pareto Chart in Excel - Cumulative Value ColumnThis is to get the cumulative percentage values so that all the complaint numbers add up to 100% in the end.
  2. Select the entire data set (A1:C10), go to Insert –> Charts –> 2-D Column –> Clustered Column. This will insert a column chart with 2 series of data (# of complaints and the cumulative percentage).Pareto Chart in Excel - Inserting Clustered Column Chart
  3. Right click on any of the bars and select Change Series Chart Type.Pareto Chart in Excel - Change series chart type[If you are using Excel 2010 or 2007, you need to select and right-click on any of the orange bars (of cumulative %) and then select Change Series Chart Type].
  4. In the Change Chart Type dialogue box, select Combo in the left pane and make the following changes:
    • # of Complaints: Clustered Column.
    • Cumulative %: Line (also check the Secondary Axis check box).Pareto Chart in Excel - Change Chart Type Dialogue Box[If you are using Excel 2010 or 2007, it will be a two-step process. First change the chart type to a line chart. Then right click on the line chart and select Format Data Series and select Secondary Axis in Series Options]
  5. Your Pareto Chart in Excel is ready. Adjust the Vertical Axis values and the Chart Title.Pareto Chart in Excel - Simple Final

How to Interpret this Pareto Chart

This chart highlights the major issues that the hotel should focus on to sort the maximum number of complaints. For example, targeting first 3 issues would automatically take care of ~80% of the complaints.

Creating a Dynamic Pareto Chart in Excel

Now that we have a simple Pareto chart in Excel, let’s take it a step further and make it a bit dynamic. Something as shown below:Pareto Chart in Excel - Dynamic Demo

In this case, a user can specify the % of complaints that need to be tackled (using the scroll bar), and the chart will automatically highlight the issues that should be looked into.

The idea here is to have 2 different bars. The red one is highlighted when the cumulative percentage value is close to the target value.

Here are the steps to make it:

  1. In cell B14, I have the target value that is linked to the scroll bar (whose value varies from 0 to 100).Pareto Chart in Excel - Scroll Bar Linked Cell
    See Also: How to create a Scroll Bar in Excel.
  2. In cell B12, I have used the formula =B14/100. Since you cannot specify a percentage value to a scroll bar, we simply divide the scroll bar value (in B14) with 100 to get the percentage value.Pareto Chart in Excel - Scroll Bar Percentage Target Value
  3. In cell B13, enter the following combination of INDEX, MATCH, and IFERROR functions:
    =IFERROR(INDEX($C$2:$C$10,IFERROR(MATCH($B$12,$C$2:$C$10,1),0)+1),1)

This formula returns the cumulative value that would cover the target value. For example, if you have the target value as 70%, it would return 77%, indicating that you should try and resolve the first three issues.
Pareto Chart in Excel - Scroll Bar Percentage Target Value

  1. In cell D2, enter the following formula (and drag or copy for all cell – D2:D10):
    =IF($B$13>=C2,B2,NA())
  2. In cell E2 enter the following formula (and drag or copy for all cell – E2:E10):
    =IF($B$13<C2,B2,NA())
  3. Select the Data in Column A, C, D & E (press control and select using mouse).
  4. Go to Insert –> Charts –> 2-D Column –> Clustered Column. This will insert column chart with 3 series of data (cumulative percentage, the bars to be highlighted to meet target, and remaining all other bars)
  5. Right click on any of the bars and select Change Series Chart Type.
  6. In the Change Chart Type dialogue box, select Combo in the left pane and make the following changes:
    • Cumulative %: Line (also check the Secondary Axis check-box).
    • Highlighted Bars: Clustered Column.
    • Remaining Bars: Clustered Column.
  7. Right-click on any of the highlighted bars and change the color to Red.

That’s It! You have created a Dynamic Pareto Chart in Excel. When you change the target using the scroll bar, the chart would update accordingly.

Try it Yourself.. Download the Example File

Do you use Pareto Chart in Excel? I would love to hear your thoughts on this technique and how you have used it. Do leave your footprints in the comments section 🙂

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  • Ferriyah

    Thank you SO much for this’ MUCH needed

    • Thanks for commenting Ferriyah.. Glad you found it useful!

  • Terry

    Nice work. I really like the dynamic slider.

    • Hi Terry.. Thanks for commenting.. Glad you liked it!

  • Yogi

    I liked this !!! Well in my Excel 2010 (Std.), the combo option is not available. However, I could select individual series and could do it.

    • Hi Yogi.. Thanks for commenting.. Glad you liked it 🙂 You are right! Excel 2010 doesn’t have the combo option, but it can be done using chart type.

  • Meera

    This is great!

    • Thanks for commenting Meera.. Glad you liked it 🙂

  • Frank Tonsen

    Nice charts!

    However, the dynamic one highlights one colum to much, e.g. for 80% 4 columns are highlighted, but – as you mentioned – 3 would be correct, i.e. INDEX($C$2:$C$10,MATCH($B$12,$C$2:$C$10,1)).
    Furthermore, you won’t need an additional column for the remaining bars if you optimize the order of the other columns.

    • Hi Frank.. Thanks for commenting..The reason I highlight 4 columns for 80% is because 3 columns would constitute only 77%. So I take an additional value (uptill 84.4%). But if you need it to be 3 only, then your formula is the way to go.

  • Mike

    Sumit – nice post – love your creative thought process. One question – does this make sense? I added another IFERROR function to the overall INDEX formula so that if you have a 100% target it registers 1 (100%). I was getting a #REF error otherwise.

    • Hi Mike.. I just noticed the #REF error at 100%. I have updated the article and the download file.. Thanks for sharing..You are awesome!

  • Kevin

    If I add a value of 0 (Zero) in the complaints column the chart is no longer sorted from high to low.

    • Hello Kevin.. You’ll need to sort the data in an descending order for this chart to work. If you add a value once you have created the chart, simply sort column A and B (using the values in column B in a descending order)

  • Chuanpoh Lim

    Why My excel Target % can’t auto update , when I scroll bar link value to 10, 20 etc.. the target is remain 0%