Ask HN: What's an .io domain worth?

I'd suggest asking for $1000, and let them negotiate you down to $500 or so.

$0.5k - $5k

Is there a marketplace where similar domains are traded?

Go big, it's a really good one!

Anything you'll be able to get above $500 will be a bonus.

I had hard time selling cool 1-letter domain so market for that stuff is quite specific.

In addition to the specific advice others have shared, the usual advice also applies. Try to get them to name a price first, be prepared to walk away if you don't like the price, and don't agree to a deal that you will regret when you wake up the next day.

Depends who wants to buy it.