What is What-If Analysis in Excel Data Table?

Ever find yourself staring at a spreadsheet, wondering how one small change could ripple through your entire business forecast? Answering questions like "What if we increased our ad spend by 10%?" or "How would a $2 price drop affect our monthly revenue?" is central to making smart business decisions. This process is called What-If Analysis, and Excel has a brilliant, often overlooked tool called Data Tables to help you do it without manually creating dozens of scenarios.

This tutorial will walk you through exactly what What-If Analysis is and provide a step-by-step guide to using Excel's Data Table feature. You'll learn how to explore potential outcomes and make data-driven decisions with confidence.

What Exactly Is 'What-If' Analysis?

What-If Analysis is the process of changing the values in cells to see how those changes affect the outcome of formulas on your worksheet. It's a way to model different scenarios and understand the potential impact of your decisions before you commit to them. Instead of just looking at your numbers as they are, you're actively exploring possibilities.

For example, a marketing manager might use it to assess how a change in website conversion rate could impact lead generation. A founder might use it to see how different pricing models affect their overall profitability. It transforms your spreadsheet from a static report into a dynamic decision-making tool.

Excel offers three main tools under its What-If Analysis umbrella:

• Scenario Manager: Lets you create and save different groups of values (scenarios) and switch between them. Good for comparing a few distinct scenarios, like "Best Case," "Worst Case," and "Most Likely Case."
• Goal Seek: Works backward. You know the result you want from a formula, and Goal Seek figures out what a specific input value needs to be to reach that result. For example, "What sales volume do we need to hit a $50,000 profit?"
• Data Tables: This is a powerhouse for seeing how changes in one or two variables impact an entire formula. Instead of testing one scenario at a time, a Data Table lets you see dozens or even hundreds of outcomes at once, all organized in a neat table. This is what we'll be focusing on - it's arguably the most efficient for exploring a range of possibilities for a variable.

Getting to Know Excel's Data Tables

An Excel Data Table is not a regular table you create with a border. It's a specific feature designed for What-If Analysis. It takes one or two variables, plugs them into your existing formulas, and calculates all the potential outcomes in a single grid. This saves you the tedious and error-prone work of manually plugging in a dozen different numbers to see the effects.

One-Variable vs. Two-Variable Data Tables

There are two types of Data Tables, and the one you use depends on the complexity of your question:

1. One-Variable Data Table: Use this when you want to see how changing one variable affects one or more results. For example: "How does changing the price of our product affect our Revenue, Cost, and Profit?" Here, price is the single variable.
2. Two-Variable Data Table: Use this when you want to analyze the impact of changing two variables on a single result. For example: "How does changing both the price of our product and our ad spend affect our total Profit?" Here, price and ad spend are the two variables, and profit is the single result.

This distinction becomes much clearer with a practical example, so let's get to creating a few ourselves.

How to Create a One-Variable Data Table (Step-by-Step)

Let's use a simple scenario. The owner of a coffee shop wants to see how changing the price of a cup of coffee affects the total daily revenue.

Step 1: Set Up Your Model

First, you need a basic calculation model in your spreadsheet. This doesn't need to be complex, it just has to be a set of values and a formula that are already in place, which the Data Table can refer to later.

Let's set up our small model:

• Cell A2: Price/Unit
• Cell B2: $4.50
• Cell A3: Units Sold
• Cell B3: 150
• Cell A5: Total Revenue
• Cell B5: Your formula, which in this case is =B2*B3

With this setup, you have a simple model that shows the initial calculation. The cell calculating revenue, B5, shows $675.00.

Step 2: Prepare Your Data Table Structure

Now, somewhere else on the sheet, create a column containing the variable values you want to test. These are the inputs.

In our example, we want to see what happens when the price is $4.00, $4.25, $4.50, $4.75, and $5.00.

• In cell D6, type the heading for your variable, in this case, "Price".
• In cells D7 to D11, enter the new price points you want to test ($4.00, $4.25, etc.).
• In the cell directly above and to the right of your list of input variables (cell E6), link your result formula from the model. You do this by typing =B5 in cell E6.

Step 3: Generate the Data Table

With your table structure in place, you're now one click away from an answer. Follow these steps:

1. Highlight the entire range of cells that you want the table to occupy, including your column of inputs and the cell that links to the formula (in this case, D6:E11).
2. Go to the 'Data' tab on Excel Ribbon.
3. Look for the 'What-If Analysis' option and click on it.
4. Select 'Data Table' from the drop-down menu. A pop-up window will appear asking for the 'Row Input Cell' and the 'Column Input Cell'.
5. Since we're only using a one-variable table, leave the 'Row Input Cell' blank and click 'OK'.

Excel will instantly populate the table cells by changing each input value one at a time in your original model calculation. It will display each result in the grid using your model's formula, allowing you to see the effect of each price change on total revenue.

Real-World Uses for Data Tables

The use of Data Tables goes beyond simple scenarios. Here are some complex examples showing where they can be applied:

Finance:

Analyzing how changes in interest rates and loan terms affect monthly payments. You can make "Interest Rate" the row variable and "Loan Term (in months)" the column variable.

E-commerce:

Understanding how price discounts and shipping costs impact profit margins. Here, "Discount %" could be one variable and "Shipping Fee" would be the second variable.

Tips and Best Practices for Using Data Tables

Data Tables are fairly straightforward once you get the hang of them, but here are a few tips to keep in mind to make the process smoother and more reliable.

• Keep your original model clean and separate: Avoid embedding your data tables right inside your original calculations for your own business's sake. Keeping your model separate improves readability and reduces the risk of you accidentally changing an original cell.
• Use clear and obvious labels: Double-check not just that your columns and rows are right but that they make sense for the person looking at them too. Ensure the input cell variables and outputs are labeled. In six months when someone else looks at the sheet, will they know what you analyzed?

Final Thoughts

What-If Analysis is a powerful way to model different outcomes and make informed business decisions. The ability to plan and predict using spreadsheets transforms them from being mere data collectors into critical decision-making tools. By understanding and implementing features like Data Tables, you gain insight into your business operations, empowering you to make strategic moves with confidence. If you're looking to master your data and visualize the impact of various changes simultaneously, Data Tables are an invaluable resource to include in your toolkit.