The way of calculating contract damages that most people find the easiest is to

(1) determine the position the non-breaching party would have been in if the contract had been performed (i.e., how much better off would they have been than they were when they entered into the contract),

(2) determine the position the non-breaching party is in after the breach (i.e., how much better off, or worse off, are they than they were when they entered into the contract) and

(3) determine how much money it would take to get her from point (2) to point (1).

Note carefully that our baseline for these calculations is the position the non-breaching party was in when she entered into the contract. In other words, position (1) is how much better off she would be in comparison to the position she was in when she entered into the contract, and position (2) how much better (or worse) off she is now (i.e., after the breach).

Why does this method give us the correct amount of damages? Simple. The purpose of contract damages is to put the non-breaching party in the same position that performance would have. That's what the method outlined above does. It moves the non-breaching party from the position they're in now to the position they would have been in if the contract had been performed.

The simplest case is where the breacher was to pay money and totally failed to do so. For example, if the breacher was to pay $100 and didn't pay anything, then (1) if the contract had been performed, the non-breaching party would have had $100; (2) the non-breaching party now has $0; and (3) it will take $100 to put the non-breaching party in the position that performance would have.