The tutorial explains the basics of the Pareto analysis and shows how to make a Pareto chart in different versions of Excel.
Blog posts of Svetlana Cheusheva: Excel and Outlook tutorials, how-to articles, and more. How to create Pareto chart in Excel. 24 Aug 2016; Excel SUBTOTAL.
In a perfect world, everything would be in harmony - every job would pay the same, every taxpayer would get the same tax benefits, every player would be equally important to a team. But our world is not perfect, and the relationships between inputs and outputs are not equal. Do you want to know the principle causes to which you should devote the most efforts? It is what the Pareto principle, or the law of the vital few, is all about.
Pareto analysis in Excel
Pareto analysis is based on the Pareto principle, named after Italian economist Vilfredo Pareto. And this principle states that for many events about 80% of the effects come from 20% of the causes. Which is why, the Pareto principle is sometimes called the 80/20 rule.
Here are a few practical examples of the Pareto principle:
- In economy, the richest 20% of the world's population control about 80% of the world's income.
- In medicine, 20% of patients are reported to use 80% of health care resources.
- In software, 20% of bugs cause 80% of errors and crashes.
To identify the most significant factors that you should focus on, you can draw a Pareto chart in your Excel worksheet.
Pareto chart in Excel
Pareto chart, also called a Pareto diagram, is a graph based on the Pareto principle. In Microsoft Excel, it is kind of sorted histogram that contains both vertical bars and a horizontal line. The bars, plotted in descending order, represent the relative frequency of values, and the line represents cumulative total percentage.
Here's what a typical Excel Pareto chart looks like:
As you see, the Pareto graph highlights the major elements in a data set and shows the relative importance of each element for the total. Below you will find the detailed instructions on how to create a Pareto diagram in different versions of Excel.
How to make a Pareto chart in Excel 2016
Plotting a Pareto diagram in Excel 2016 is easy because it has a built-in Pareto chart type. All you need to have is a list of items (issues, factors, categories, etc.) in one column and their count (frequency) in another column.
As an example, we are going to do Pareto analysis of typical user complaints about software based on this data set:
To make a Pareto graph in Excel, please follow these simple steps:
- Select your table. In most cases it is sufficient to select just one cell and Excel will pick the whole table automatically.
- On the Inset tab, in the Chats group, click Recommended Charts.
- Switch to the All Charts tab, select Histogram in the left pane, and click on the Pareto thumbnail.
- Click OK.
That's all there is to it! The Pareto chart is immediately inserted in a worksheet. The only improvement that you'd probably want to make is to add/change the chart title:
Customizing Excel Pareto graph
The Pareto chart created by Excel is fully customizable. You can change the colors and style, show or hide data labels, and more.
![Pareto Pareto](/uploads/1/2/6/2/126266032/795973919.jpg)
Design the Pareto chart to your liking
Click anywhere in your Pareto chart for the Chart Tools to appear on the ribbon. Switch to the Design tab, and experiment with different chart styles and colors:
Show or hide data labels
By default, a Pareto graph in Excel is created with no data labels. If you'd like to display the bar values, click the Chart Elements button on the right side of the chart, select the Data Labels check box, and choose where you want to place the labels:
The primary vertical axis showing the same values has become superfluous, and you can hide it. For this, click the Chart Elements button again, then click the little arrow next to Axes, and unselect the Primary Vertical Axis box.
The resulting Pareto chart will look similar to this:
How to create a Pareto chart in Excel 2013
Excel 2013 does not have a predefined option for the Pareto graph, so we will be using the Combo chart type, which is the closest to what we need. This will require a few more steps because all the manipulations that Excel 2016 performs behind the scene, you will have to do manually.
Organize data for Pareto analysis
Set up your data set as explained below:
1. Calculate cumulative total percentage
Add one more column to your data set and enter the cumulative total percentage formula there:
=SUM($B$2:B2)/SUM($B$2:$B$11)
Where B2 is the first and B11 is the last cell with data in the Count column.
In the dividend, you put a cumulative sum formula that adds up the numbers in the current cell and in all cells above it. Then, you divide part by total to get percentages.
Enter the above formula in the first cell, and then copy it down the column. For the results to be displayed as percentages, set the Percent format for the column. If you'd like the percentages shown as integers, reduce the number of decimal places to zero (please see How to display decimal places in Excel for instructions).
2. Sort by count in descending order
Since the bars in a Pareto chart should be plotted in descending order, arrange the values in the Count column from higher to lowest. For this, select any cell and click A-Z on the Data tab, in the Sort and Filter group. If Excel prompts to expand the selection, do it to keep the rows together while sorting.
![Weighted Pareto In Excel 2016 For Mac Weighted Pareto In Excel 2016 For Mac](/uploads/1/2/6/2/126266032/867089214.png)
Alternatively, add auto filter to be able to re-sort data faster in the future.
At this point, your source data should look similar to this:
Draw a Pareto chart
With the source data properly organized, creating a Pareto graph is as easy as 1-2-3. Literally, just 3 steps:
- Select your table or any cell within it.
- On the Inset tab, in the Chats group, click Recommended Charts.
- Switch to the All Charts tab, select Combo on the left side, and make the following modifications:
- For the Count series, select Clustered Column (default type).
- For the Cumulative % series, select the Line type, and check the Secondary Axis box.
The chart that Excel inserts in your worksheet will resemble this one:
Improve the Pareto chart
Your chart already looks very much like a Pareto diagram, but you may want to improve a few things:
1. Set the maximum percentage value to 100%
By default, Excel has set the maximum value for the secondary vertical axis to 120% while we want it 100%.
To change this, right-click the percentages values on the Y-axis in the right-hand side, and choose Format Axis… On the Format Axis pane, under Bounds, set 1.0 in the Maximum box:
2. Remove extra spacing between bars
In a classic Pareto graph, the bars are plotted closer to each other than in a combo chart. To fix this, right-click the bars and choose Format Data Series… On the Format Data Series pane, set the desired Gap Width, say 5%:
Finally, change the chart title, and optionally, hide the chart legend.
What you now have looks like a perfect Excel Pareto chart:
How to draw a Pareto chart in Excel 2010
Excel 2010 has neither Pareto nor Combo chart type, but that does not mean you cannot draw a Pareto diagram in earlier Excel versions. Of course, this will require a bit more work, but also more fun :) So, let's get started.
- Organize your data like explained earlier: sort by count in descending order and calculate cumulative total percentage.
- Select your table, go to the Insert tab > Charts group, and choose 2-D Clustered Column chart type:This will insert a column chart with 2 series of data (Count and the Cumulative percentage).
- Right click the Cumulative % bars, and click Change Chart Series Type. (This may be the trickiest part because the bars are very small. Try hovering your mouse over the bars until you see the Series 'Cumulative %' hint, and then right-click.)
- In the Change Chart Type dialog box, pick a Line
- At this point, you have a bar chart with a flat line along the horizontal axis. To give it a curve, you need to put a secondary vertical axis on the right-hand side. For this, right click the Cumulative % line, and then click Format Data Series…
- In the Format Data Series dialog box, choose Secondary Axis under Series Options, and close the dialog:
- Make the finishing touches: set the maximum value for the secondary vertical axis to 100%, make the bars wider, and optionally, hide the legend. The steps are basically the same as in Excel 2013 described above.
Voilà, your Pareto Chart in Excel 2010 is ready:
That's how to make a Pareto chart in Excel. If you'd like to learn about other chart types, I encourage you to check out the resources below. I thank you for reading and hope to see you on our blog again next week!
You might also be interested in:
A reader emailed to ask whether you could make a dynamic chart using OFFSET-function-based Names in Excel 2016 for Mac. Good question, and I wondered if he’d encountered some unexpected problem, perhaps a bug, in Mac Excel. So I dusted off my MacBook Pro and tried it out.
Bottom line: There are several ways to make dynamic charts in Excel, and there seems to be no difference other than cosmetic in how they work between different versions of Excel, and between operating system. The protocols are the same for Mac Excel and Windows Excel, and perhaps it’s time for a quick review. This exercise was done completely in Mac Excel 2016, and other than not knowing a few of the shortcuts I use everyday, it was not very different from working in Windows Excel 2016.
Dynamic Charts in Excel
It’s pretty easy to set up data and create a chart in Excel. But once you’ve created a chart, it keeps plotting data from the same cells. If the data in the cells changes, so does the chart, but if the data extends to more cells (or shrinks to fewer cells), the chart doesn’t seem to notice.
There are a couple ways to create charts that will grow with your data. The easiest way is to use Tables as the chart source data. A bit more complicated is to use Excel’s Names to define the series data for your chart. Using Names can lead to more flexibility in defining the data in your charts. I’ll describe how to make dynamic charts using Tables, using Names, and using Names in a more flexible way.
Dynamic Charts Using Tables
The easiest way to make a chart’s contents reflect the size of a range of data is to put the data into a Table.
Tables made their appearance in Excel 2003, and were called “Lists”. These lists were a more structured container for your data, with a database structure of fields (columns) and records (rows), field headers (column headers) and filtering tools. You could sort and filter your data range easily, and any formula that used a whole column of your List updated to automatically keep using that whole column of the list. Lists became the favored source data for charts and also for pivot tables.
In Excel 2007, Lists became known as “Tables”, and their capabilities have been expanded in every version since.
The screenshot below shows the same data and chart as above, but the data is now in a Table.
To get your data into a table, you select it (or select one cell and let Excel figure out how far it stretches), and on the Insert tab of the ribbon, click Table. Excel asks if your table has headers, then it applies a Table style (the yellow style is shown below), it adds AutoFilter dropdown arrows to the field headers, and it puts a small backwards “L” bracket at the bottom right corner of the table.
You can change the size of the Table by clicking and dragging the bracket at the bottom left corner of the Table. If you type or paste data directly below the Table, the Table will automatically expand to include this new data. And a chart that uses all rows of the existing Table will expand accordingly.
If you type or paste data directly to the right of the Table, the Table will also automatically expand to include this new data. A chart that uses all of the existing Table will expand accordingly.
This little trick of adding a new series if the data expands accordingly is nice, but it requires that the chart already contain all of the Table’s data.
Names (a/k/a “Defined Names”, “Named Ranges”, etc.)
A Name is what Excel calls a variable that resides in a worksheet or a workbook.
Names are often assigned to cells or ranges; for example, you might place a sales tax rate into a cell and name the cell
SalesTax
, and subsequently use the cell’s name rather than its address in a formula. Because of this Names have been nicknamed “Named Ranges”.However, the definition of the name includes a formula. If my sales tax rate was stored in cell A1, then my Name SalesTax would have a definition of “=A1”. Because of this, John Walkenbach proposed that Names should be called “Named Formulas”, but he’s smarter than the rest of us, so his suggestion didn’t stick.
We can use Names in our charts, but we need a distinct name for each dynamic range that the chart will need. We’ll need one Name for the X values if the series use the same X values range, and we’ll need one Name for the Y values of each series. In our sample, we will need three Names. I’ll call them XValues, Y1Values, and Y2Values, and I will define them as follows:
This OFFSET formula uses cell A1 of worksheet Names as a starting point, offsets the range down by one row and right by zero rows, then makes it as many rows tall as the number of alphanumeric cells in column A minus one (we don’t want to include the “Category” label), and one column wide.
So starting with cell A1, our range begins in cell B1, and is 6 rows tall and one column wide; our final range is A2:A7. It’s easy to see that adding another value into cell A8 will expand this range to A2:A8. However, if we add a value in cell A57, it will also expand our range to A2:A8, so we need to make sure the rows below our data are kept blank.
The other two definitions are easier:
We’ve already figured out how large each range needs to be, since the X and Y values have the same number of cells, so both of these OFFSET formulas start with the first name
XValues
as an anchor, and offset no rows down but one or two columns to the right. If we don’t specify sizes, then the new Names will define ranges the same size as the anchor.Okay, that’s how to build a formula definition for a Name. Let’s actually create a Name.
On the Formulas tab of the ribbon, click the Define Name dropdown, and select Define Name… This pops up the Define Name dialog, shown below for the Mac. The Windows dialog is a bit more extensive, and Windows Excel has a much better Names Manager (this dialog happens to serve as the Mac’s Names Manager). For a truly powerful Name Manager, you should try out the free Name Manager add-in at the website of my colleague, Excel MVP Jan Karel Pieterse.
If you’ve selected data before opening the dialog, Excel tries to guess how you want to name data based on labels in the top row and left column of the selection. But I’ve cleared all of this so we’re starting fresh.
Here I’ve typed the name of the Name. Note that I’ve included the worksheet name and exclamation point, which means the Name will be “in scope” (i.e., available) for the worksheet “Names”. Otherwise it would be “in scope” for the entire workbook.
Then enter the formula where it says “Select the range of cells”. You can enter any formula that refers to cells, or a formula that calculates a value, or a constant value. I don’t capitalize my function names when I enter them; that way, if there’s an error, Excel won’t capitalize a bad function name. A misspelled keyword is easier to recognize if it is not capitalized (“offfset” vs. “OFFFSET”).
Click the OK button to add the Name and exit the dialog, or click the Plus icon to add the name and keep the dialog open.
The name is listed in the box at the left; the worksheet name is listed as well to remind us that the scope of the Name is limited to that worksheet. The sheet name is removed from the name in the top right box.
You can make sure the name refers to the intended range if you click in the box with the formula defining the Name. With the cursor in the formula, the range A2:A7 is highlighted in the worksheet. Perfect.
Now enter the name and formula for the next Name, and don’t forget to include the worksheet name.
Click the plus icon to add the name, and click in the formula to make sure that the Name references the desired range, B2:B7. Check.
Enter the name and formula for the last Name, remembering to include the worksheet name. Click the plus icon, and check that the formula refers to C2:C7.
Whew! Now we’re finally ready to make our dynamic chart.
Dynamic Charts Using Names
Every chart series has a formula that defines the data in the chart. The blue series in the static chart below is
This means it uses cell B1 of the sheet Names for the series name (“Alpha”), A2:A7 for the X values, B2:B7 for the Y values, and it’s the first series in the chart. The formula for the orange series is
We can use the Select Data dialog to modify these, but it’s easiest to simply edit the formula directly.
Select the blue series of the dynamic chart, and observe the formula in the Formula Bar. It probably looks like the first SERIES formula above (I invariably start with a static chart of the data I want to plot dynamically). Edit the formula to read as follows, and press Enter.
If Excel doesn’t like the new formula, make sure you’ve spelled the Names correctly.
Similarly edit the formula for the orange series to read
At first the two charts look the same.
When we select the static chart, we can see the chart’s source data highlighted in the worksheet.
We see the same data highlighted when the dynamic chart is selected. It’s convenient that Excel is smart enough to highlight the chart data even if it is defined by dynamic Names. I’ll select the dynamic charts in the rest of this tutorial to show the range included in these charts.
Now let’s extend the data by a couple of rows. The static chart isn’t clever enough to notice, but the dynamic chart keeps up nicely, illustrated by the highlighted data in the worksheet.
If we extend the data by a new column, the static chart doesn’t change, and the dynamic chart doesn’t add a series to represent the new data.
I’ve added a third chart which shows the new data. I had to add an extra Name to the worksheet:
and then I had to add a third series to the chart with the following SERIES formula:
My new chart contains all the data, though I had to include it in the chart manually.
Before Excel 2003, the only way to get a dynamic chart was by using Names. It’s a lot of work, and hardly seems worthwhile if using Tables is so easy. But if we know how to make a chart using Names, we can make a dynamic chart that’s more complicated than just expanding to add a row.
Dynamic Charts Using Complicated Names
How about a chart that doesn’t show all the data, but only the last several points. This might be useful if you want to show the last six months of sales, or high temperature for the previous week.
We’ll make a dynamic chart that plots the last five values. The setup is almost identical to the previous dynamic chart, but our definition of
XValues
will change.This OFFSET formula uses cell A1 of worksheet Names as a starting point, offsets the range down by the number of alphanumeric cells in column A minus one, and right by zero rows. This means now we’re starting at cell A7 instead of A2. Then we make the range -5 rows high, meaning we count upward, and one column wide. Our new X values range should be A3:A7. After entering the new name as before, check to make sure the correct range is highlighted.
Edit the SERIES formulas of your dynamic chart as we did above. We see that our static chart shows all six points of the data, but the dynamic chart shows only the last five points, categories B through F.
Let’s add a couple rows of data. The static chart is, well, static, but our dynamic chart shows the new last five points, categories D through H.
Summary
Dynamic charts can easily be created in Excel using data ranges from Tables.
With a bit more work dynamic charts can be created using skillfully defined Names. These charts can be more flexible than Table-based dynamic charts, depending on the formula skills of the Excel user. There are a few gotchas that I didn’t mention: some Name definitions seem like they should work, for example, but Excel charts won’t recognize certain functions. Also, some Name names may cause problems, especially those beginning with the letter “c”; you can’t enter them into the SERIES formula, but you can use them in the Select Data dialog.