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Create a Pareto Chart in Excel in 2 steps – Easy Tutorial

Jun 14, 2021 | Microsoft Excel Tutorial

How to create a Pareto Chart in Excel 2016, Excel 2019, or Excel 365 in 2 steps?

STEP 1 – Select your data: 1 column for the “causes” and 1 column for their “impacts”.  There is no need for the data to be sorted.

Create an Excel Pareto Chart - Select Data - 1 column for "causes" + 1 column for "impacts"

 

STEP 2 – Select Pareto Chart in the ribbon: Insert > Insert Statistical Chart > Pareto. The Pareto Chart you get is then ready to be customized!

Insert - Statistical Chart - Pareto Chart
Pareto Chart in Excel - Default Excel Pareto Chart

That’s it! Congratulations! 

Pareto Chart In Excel: Video Tutorial
Pareto Chart In Excel: Customize your Pareto Chart

There are 2 ways to customize your Pareto Chart in Excel: chart design menu in the ribbon + right-click menus in the chart

1 – In the ribbon, several design options are available under the Chart Design menu:

Chart Design in the Excel ribbon

2 – In the Pareto Chart, the menus you get by right-clicking provide you as well with different design options:

Design options when right-clicking in the chart
To create a Pareto Chart in Excel 2013, simply follow the tutorial below

>> Pareto Chart  in Excel 2013 <<

To create a Pareto Chart in Excel 2010, simply follow the tutorial below

>> Pareto Chart  in Excel 2010 <<

How to Draw a Target Line in an Excel Pareto Chart?

The fastest way to build an Excel Pareto Chart with a target line is simply using the free template below.  Alternatively, you can follow this YouTube tutorial to get an Excel Pareto Chart with a target line.

Pareto Chart in Excel – Free Templates for Download

Download the free template used as an Excel Pareto Chart example in this tutorial:

  >> Download the Free Excel Pareto Chart Template <<

(Pro:  no need to sort the data input by descending effect – Con: no target line)



Download a free template for an Excel Pareto Chart with a target line:

  >> Download the Free Excel Pareto Chart Template <<

(Pro: target line  – Con: need to sort the data input by descending effect)

Download the free template provided by Microsoft Office combining an Excel Pareto Analysis in a table with an Excel Pareto Chart:

>> Download the Free Cost Analysis & Pareto Chart Template from Microsoft <<

(Pro:  official Excel Pareto Chart template – Con: might be unnecessary complex)

Pareto Chart In Excel – Overview

Why building a Pareto Chart in Excel?

A Pareto Chart or Pareto Diagram helps to turn your data into clear visualizable actionable insights. It highlights what really matters by putting emphasis on the most important drivers of a phenomenon. A Pareto Chart is an excellent tool to illustrate and justify a short-list of the most important tasks in a project management context. It can be combined with other project prioritization methods such as the Einsehower’s Urgent-Important Matrix.

In short, a Pareto Chart is a root cause identifier chart that may illustrate the existence of a Pareto distribution within your data.  A Pareto Distribution is observed when the Pareto Principle holds. The Pareto Principle (or “20-80 rule” or “Law of the Vital Few”) states that, for many events, roughly 80% of the effects come from 20% of the causes

Pareto Chart In Excel: Example
Pareto Chart in Excel

As an example, the Pareto Diagram or Pareto Chart above shows that 80% of the customer complaints ensue from only 20% of the products.

WHy do people Draw a Target Line in Pareto Charts?

To help distinguish the vital few from the trivial many, a target line or cut-off line is sometimes drawn in a Pareto Chart. With a perfect Pareto Distribution, the target line is set to 80%. In real life, the value can be adjusted to make a relevant separation between the most important causes (“Vital Few”) from the least important ones (“Trivial Many”) as the frontier between the two can be different to 80%.

How to choose between a Pareto Chart  (diagram) and a Pareto Analysis (table)?

If the data set underlying your Pareto Analysis is made of limited “causes or drivers” to analyze, a Pareto Chart (diagram) is certainly the way to go. If the data set has a large variety of “cause or drivers”, then crunching the data with a direct Pareto Analysis (table) in a sheet is more appropriate because a Pareto Chart will be scattered with too many pieces of information and will not yield clear visualizable and actionable insights.

A Pareto Analysis can be done manually as explained in this Pareto Analysis Excel tutorial.  To automate a Pareto Analysis in just one-click like shown in the DEMO section of this website,  you can use an Excel Pareto Analysis Add-In. An Excel Add-in is particularly useful for Excel users who have to do Pareto Analysis in Excel on a frequent basis. The Excel Pareto Analysis Add-In also helps to save time when the data-set to analyze is defined with active filters in Excel. These filters can stay in place when using the Add-in hence avoiding additional time-consuming steps of data preparation such as building a temporary data set from the relevant subset of data etc.

“The great thing in life is efficiency. If you amount to anything in the world, your time is valuable, your energy precious. They are your success capital, and you cannot afford to heedlessly throw them away or trifle with them.” ― Orison Swett Marden

Pareto Chart In Excel – Conclusion

With Microsoft Excel 2016 and more recent versions, it takes only two steps to build a Pareto Chart. Since it is swift and easy, we advise you always to look at the data you work with by making a Pareto Chart. You may find insightful results that could lead to better time or budget management in your business operations.  To make a Pareto Chart with Google Sheets, please refer to this article here. For more details about the Pareto Principle, please refer to the FAQ by clicking here.

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