When deciding on a salary you need to be fair and competitive but of course you should not pay more than you need to. You can think of the process as a balancing act.
To begin with, you must determine what your needs are. If you describe the job as just child-care and agree on a salary with your nanny but then, in fact, expect her to do a considerable amount of housework, you will likely run into problems.
Decide how many hours you will realistically need for your nanny to work. You will run into problems if you offer a weekly salary for a determined amount of hours but say “occasionally I will need you to stay later,” and you end up increasing the time regularly If for a moment you put yourself in the nannie’s place – think about what you might feel if your were being made this offer.
Once you are clear about the job description you should consult an agency regarding what a fair wage is for your job description.
In my opinion, the way to open this discussion with your prospective employee is not “ how much money are you expecting,” but rather state your salary and then see what he/she says. You can negotiate from there.
I also recommend telling your employee that this is the starting salary and if things work out, she could expect a raise in a year (or 6 months).
Don’t hesitate to say no if you feel that your employee is taking advantage of you and asking for too much. For instance, you may feel it is fair to give her major holidays off with salary but are not willing to do the same for lesser holidays. You should be fair but don’t be a pushover.