Example 1: You are studying the share price of Reliance Industries from April to June 2009. Will you label all the data points. No. Because it will become cluttered and will serve no extra purpose.

What you must remember about labeling your data?
1. All relevant data points should be labeled. There is no compulsion to label every data point. It depends on what point you are trying to prove with the chart. (Example 1 above talks about this)
2. The labels should not clutter the chart and hurt audience understanding. Space them out and make them legible. The labels have to be seen properly.
3. Position the label properly on the chart. Labels on a pie chart can be inside the pie or outside. Make sure you choose what is right for your given chart. The objective that drives this choice is how easily readable the label is.
To understand how important labels are and how you should label a chart take a look at some real life charts:
Example 2: This chart is from ACC's website. Take a quick look at the bar on the extreme right. What is the value on the bar graph and the line graph?

Example 3: Again from ACC's website. Answer this question. What is the capacity utilization (%) for the 5 years?

Use different colors for labeling different graphs (in this case, use different label colors for bar and line graph). Use this color coding when the labels have to appear so close to each other. When the labels are far away, color coding is not needed.
Example 4: This bar graph from AV Birla Group's website is making a point that there has been a strong growth in revenues.

Example 5: This chart from Hindustan Unilever's website is interesting. They are comparing the market share of the company in General Trade (GT) and Modern Trade (MT). MT means the super markets and GT the Kirana or Mom-n-Pop Stores.

So, what did we learn about labeling data?
To summarize, we have the following learning:
1. There is no need to label every data point. It depends on what point you are trying to prove with the chart.
2. The labels should not clutter the chart and hurt audience understanding. Space them out and make them legible. The labels have to be seen properly.
3. Color code the labels. If there are two line grahs which are close to each other, label them in different font colors.
4. Position the label properly on the chart. Labels on a pie chart can be inside the pie or outside. Make it easy to read.
We have now completed 6 Tips out of the 14. How are you liking the series? You agree to what's been said or you disagree. You need some clarification. You are going to make a chart and not sure how to? I am eager to listen to you. Leave a comment.
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Disclaimer: All charts have been used for educational purposes. They will be removed in case of any objection to anyone.
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