Pareto Chart in Excel: Find the Few Causes Behind Most of Your Problems

A Pareto chart is a bar chart of problem categories sorted from most to least frequent, with a line showing the cumulative percentage. It applies the Pareto principle, often summarized as 80/20: a small number of causes usually account for most of the problems. In Excel you can build one in minutes from a simple count table, and it tells you where to focus your improvement effort first. This guide covers the data, the formulas, two ways to draw the chart and a worked example.

Step 1: collect and count the data

Start from a log where every event has a category: complaints, returns, defects, late deliveries, support tickets. Keep categories clear and mutually exclusive, and include an “Other” category for the rest. Count each category with:

=COUNTIF(Log[Category],A2)

If cost matters more than frequency, sum the cost per category with SUMIFS instead; a rare but expensive problem may deserve more attention than a frequent, cheap one.

Step 2: sort and add percentages

• Sort the table by count, largest first. In Excel 365 you can do it automatically: =SORTBY(A2:B8,B2:B8,-1)
• Share of total: =B2/SUM($B$2:$B$8)
• Cumulative percentage: =SUM($B$2:B2)/SUM($B$2:$B$8), copied down.

Step 3: draw the chart

Option A: the built-in Pareto chart

In Excel 2016 and later, select the categories and counts, then Insert > Statistic Chart > Pareto. Excel sorts the bars and adds the cumulative line on its own.

Option B: a combo chart

Select categories, counts and cumulative percentages, insert a combo chart, set counts as clustered columns and the cumulative percentage as a line on the secondary axis, with that axis fixed from 0% to 100%. Add a horizontal line at 80% if you want the threshold visible.

Example: complaints at a restaurant, one quarter

Three categories out of seven explain 75% of complaints, and they are linked: at peak hours the kitchen and floor fall behind, orders get mixed up and plates wait at the pass. Fixing the peak-hour workflow addresses most complaints at once; working on noise or price first would barely move the total. The causes of slow service can then be dug into with a cause-and-effect analysis, and the fixes organized in an action plan.

Reading a Pareto chart well

• The 80/20 split is a rule of thumb, not a law; sometimes it is 70/30 or 90/10. What matters is the steep start of the curve.
• If the bars are all about the same height, the problem is spread out, or the categories are too broad or too narrow.
• Re-run the chart after improvements: the top bar should shrink, and a new top category will appear.
• Combine with severity: the FMEA template weighs how serious each failure is, not just how often it happens.

Complaint data often comes from the customer satisfaction survey. When several fixes compete for the same budget, score them with the decision matrix. More guides are in Project Management.

Frequently asked questions

What is the Pareto principle?

The observation that a minority of causes often produce the majority of effects, commonly expressed as roughly 80% of problems coming from 20% of causes.

Which Excel versions have the built-in Pareto chart?

Excel 2016 and later on Windows, and Microsoft 365. In older versions, use the combo chart method.

Should I count events or costs?

Count events to find frequent problems; sum costs to find expensive ones. Building both charts often gives the clearest picture.

Can I make a Pareto chart in Google Sheets?

There is no dedicated Pareto chart, but a combo chart with columns and a cumulative line on a secondary axis works the same way.