We are currently negotiating this. The business is making around $2000 profit a week. He is saying 10%, I'm more thinking around 5%. How do I know what would be fair? How is it calculated?
As an employee, I would argue that I'm investing the difference (what you call sacrifice), and look for equity to match it up.
Check out https://angel.co/salaries
Pick location, market & role. There you can see equity given + salary.
There's a caveat though, if this is you first developer and he/she is going to be essential to your growth maybe you should consider him/her as a cofounder. Any tech business needs a tech cofounder in my opinion.
In that case, a much higher percentage than what you would see for employees should be given out.
What is market telling about ? Search around and you will find.