Williams is under contract until 2015 and Swansea are understandably keen to hold on to the 28-year-old, who has regularly captained the side since their promotion to the Premier League. Arsenal were considered favourites to secure the signature of the Wales captain, but reports have suggested the Gunners have baulked at the asking price for Williams.
But left-back Davies, who flourished playing alongside his international skipper last season, believes the required fee should come as little surprise.
He said: "Last season I would say Ash was one of the best centre-halves in the Premier League, I cannot think of many who were better than him. The job he did was incredible. A price of £10million or more to sign him is completely justified.
"You see some of the money that gets spent in this league on players who are unproven in the Premier League. I think £10million is more than a fair price."
Swansea have strengthened their defensive ranks with the acquisition of Jordi Amat from Espanyol in a £2.5million deal, but Davies believes it is vital they manage to hang on to Williams.
He said: "You could see last season how good he was for us and he would be a massive loss. At the moment he is still a Swansea player and hopefully that will stay the same, but if he does leave for another club we will have to adapt quickly, We have Jordi Amat coming in as a new signing and hopefully he can be as good as, if not better than him, if it comes down to it."
He added: "Ash gave me a lot of confidence on the pitch and the transition from Swansea to playing for Wales was made a lot easier as I played with him every week.
"He is a great player and a great captain, he is always there to talk to, and if you have to say something he is happy to take it."