What is a Pareto Chart?

A Pareto chart is a hybrid of a bar chart and a line graph used for data analysis of various issues, problems, or causes by cost, time, or frequency of occurrence and for determining the most significant or critical issues in a business, an organization, a society, or an industry. Also known as a sorted histogram chart, a Pareto chart is composed of both columns sorted in descending order and a line representing the total cumulative percentage. It points out the largest elements or factors in a data set and guides project managers, quality control managers,  and other professionals to observe and examine the most common issues.

According to Asana, the Pareto principle or the 80-20 rule “is a phenomenon that states that about 80% of outcomes derive from 20% of causes.” Pareto charts demonstrate the relationships between two numbers, their quantities, their changes, and their relationship to other quantities. For instance, when production and quality managers are assessing a product’s quality, the Pareto chart displays the number of occurrences for a specific type of failure and the percentage that each type of failure has among all occurrences of failure. Using a Pareto chart can help them and other managers to identify which most frequently occurring failure(s) to resolve first, improve output, and determine the feasibility of a business idea.

Uses of Pareto Charts

Production managers, product analysts, software developers, quality control managers, sales marketing specialists, and other professionals use Pareto charts and other types of statistical representations such as pie charts for a variety of purposes. Learn more about the different purposes and uses of Pareto charts in different fields and industries. 

Quality Control and Project Management in Production and Manufacturing: Pareto charts are used as quality control tools to help project managers, production managers, and quality managers analyze and prioritize the resolution of issues or problems. These charts help in identifying significant defects that have the most cumulative effect. The first bars in a Pareto chart are always the tallest as they show the most common sources of defects, while the cumulative percentage line shows which defect the team should focus on to reach the most overall product or project improvement. Building Pareto charts help companies to analyze defects in their production and manufacturing lines. They can use some operations software to allow them to obtain real-time visualizations and generate Pareto analysis reports automatically. Also, these charts help them to see how more effort is dedicated to several core tasks to heighten productivity. Customer Support, Marketing, and Sales: These charts are used for customer support, marketing, and sales of a business firm. They communicate the most complaints coming from a smaller number of customers. Marketing professionals use Pareto charts to visualize how a greater percentage of traffic is produced by a smaller number of posted articles. Sales associates use these charts to better leverage bigger customer accounts to maximize the total sales of the company. If you are working on your marketing and sales activities, use the Pareto principle and Pareto charts to discover your best customers, search niches with the best opportunities, identify difficult customers to resolve any issues with them, satisfy your best buyers, and classify high-value keywords that can drive customer engagement and traffic. Educational Assessment: Educators, academic tutors, teachers, and professors apply the Pareto principle and use Pareto charts to improve the overall behavior of students and enhance classroom engagement. They concentrate on several major goals to guide them in attaining maximum output and creating a meaningful impact on their students. By using these data visualization tools along with student assessment reports and literacy assessments, they are able to create a balance of content and impact in the classroom, closely monitor the consumption of resources in the classroom, and assist them in the equal distribution of activities and tasks among students. Human Resources Management: Human resources or HR managers use Pareto charts and the Pareto principle when it comes to developing strategic workplace policies and building a more efficient and productive workplace. These charts help them to improve employee engagement, communication, and growth in the organization. 80% of their decisions must be employee-driven and use 80% of their time to facilitate employee-centric conversations, plus allow the employees to focus on the 20% most prioritized tasks.

Alternative Charts and Graphs to a Pareto Chart

Aside from a Pareto chart, there are some basic quality control and project management tools that you can use when it comes to identifying and resolving business or organizational problems.

Cause and Effect Diagrams: Also known as Ishikawa or fishbone diagrams, cause and effect diagrams are visual representations that organize potential causes for a certain issue or effect by demonstrating them in increasing detail, suggesting causal relationships among theories. These diagrams help in organizing various theories about root cause analysis when detecting the root cause of an issue while graphically presenting the information fully well. Using cause-effect diagrams is beneficial for managers to focus the attention of all the key people involved with the particular issue at hand in a systematic and well-structured manner. Plus, these diagrams portray clear relationships between elements through the graphic representation of very complicated events. Control Charts: These graphs are used to help managers facilitate production control by studying how a process changes over a period of time. Control charts determine whether the product quality and manufacturing processes are being controlled and managed under stable conditions. They can help managers to understand the variations that are always evident in processes. Variations remaining within their control limits mean that the process is efficiently working. Variations that spike outside their control limits depict that certain issues must be corrected immediately. There are different types of control charts that you can use: X bar control charts, range R control charts, standard deviation S control charts, and attribute control charts. Histograms: Invented by Karl Pearson, a histogram is a chart used to graphically represent the frequency distribution of several data points of one variable. It classifies data into different range groups and counts how many data points belong to each of those range groups. Histograms are fundamental tools in statistics to represent the distribution of sample data. These charts are used for various purposes such as when data has a single independent variable, when the sample data has a continuous range, when two datasets need to be compared, analyze the nature of frequency distributions and the data symmetry, and analyze how process outcomes changes over time. Scatter Diagrams: Also known as scatter plots, scatter diagrams are versatile charts that display the relationship between two variables to help the audience clearly understand a relationship or trend which would be impossible to observe from any other data visualization tools. These charts are mainly used in science, especially in science journals and publications. Stratifications: Stratification is a data collection and analysis technique used by statisticians and analysts to sort data, people, and objects into distinct groups or layers so that patterns or trends can be seen and analyzed. Many survey researchers use different sampling methods like stratified sampling in this data visualization to analyze the subsets of stratified data separately.

How to Create a Pareto Chart

Pareto charts are easy to create when you use software and apps like Excel, MS Word, and PDF. Follow the steps indicated in this section for making a simple and systematic Pareto chart.

Step 1: Identify and Divide the Causes or Issues

Specify the causal factors or issues you want to represent on the Pareto chart. These factors could be positive or negative based on the context of an event or situation. Divide the causes or issues into specific categories. Select the correct measurement (frequency, cost, or quantity) and define the time period for the chart.

Step 2: Construct a Frequency Table and Plot the Bar Chart

Construct a frequency table to document the occurrence of different variables at different points in time. Include a cumulative frequency column in your frequency table. Use the collected data to compute the subtotals for each category. Then, adjust the scale of your left vertical axis to account for the biggest subtotal from the different categories. Draw your bars progressively from the tallest on the left to the shortest on the right.

Step 3: Make a Computation and Draw the Line Graph

Compute the percentage of each subtotal category when you divide them by the total of all categories that represent 100% as shown by the right vertical axis. After that, compute the cumulative sums from left to right and draw the line graph to represent the sums against the percentage of the right vertical axis.

Step 4: Use a Sample Pareto Chart Template

To easily and quickly create a Pareto chart, select, download, and use a sample Pareto chart template available online. Sample.net offers wide-ranging chart and document templates including Pareto charts. Edit the content and style of the template according to your needs and preferences. Finalize and save the Pareto chart after including all the important data points.


What are the benefits of using the Pareto principle?

Using the Pareto principle in business can help in increasing productivity and profits. Identifying that 80% of sales are generated by 20% of the sales and marketing associates demonstrates where you need to prioritize your attention and resources. 

What is the 80/20 rule in the Pareto chart?

The 80/20 rule in the Pareto chart states that approximately 80% of the effects come from 20% of the causes for most events. 

What is the main objective of a Pareto chart?

The main objective of a Pareto chart is to portray the relative frequency or size of different issues in a descending bar graph in order to point out the cumulative impact of the issues or problems.

What are Pareto charts in Excel?

Pareto charts in Excel highlight the largest factors in a data set. These charts are project management and quality control tools to help managers and teams to analyze the most common issues or problems.

How to interpret a Pareto chart?

When you interpret a Pareto chart, know each major component included in the chart. The left vertical axis contains the number of counts or amount of cost depending on the data used. 

Project managers, quality control managers, product designers, and other professionals use Pareto charts for eclectic applications such as customer support, finance, marketing, sales, project management, and quality control. These charts are beneficial to identify the most significant causes or challenges a company or an organization encounters and to convey data effectively to others. If you need to create other types of charts for your project, our website provides a unique collection of sample charts, diagrams, graphs,  and other documents such as sample root cause analysis, radar charts, and waterfall charts.