The former forward doesn't believe the Reds youngster is worth the money being quoted.
The youngster recently revealed to the BBC that he has turned down a £100,000-a-week contract at the club, citing that it is not a matter of money he wants to earn.
The player and his representatives have been in negotiations with the club for several months over an extension to his current deal, which has two years left to run, but have so far been unable to reach an agreement.
The failure to sign a new deal has led to the youngster being linked with a move to a number of top European clubs - by the Daily Mail, among others - and Collymore says he is not yet worth the ridiculous figures that are being mooted.
“Sterling has scored three match-winning goals this season; that is nowhere near £180,000-per-week value,” wrote Collymore.
“If Liverpool were to lose Sterling and get a healthy transfer fee of around £25 million-£30 million for him, I wouldn't necessarily be sad to see him go, as a former Anfield player.”
The former forward also believes that it would be best for Sterling to sign a new contract at the club, echoing the sentiments of other pundits who believe his football development would be best served staying at Anfield.
However, he believes that if the player is requesting such large contract terms at this moment in time, then Liverpool should allow the player to leave and replace him with graduates from their academy.
“It would be better if he did sign a new contract, but if he is asking for ridiculous money, then absolutely not. Liverpool will be able to find players as good as Sterling in their academy, such as Jordon Ibe,” he added.