+1, I do free Priority CONUS on all of my auctions. I took a 3 month average of shipping cost and apply that to my starting price. If I ship all my stuff to the east coast, I make money. OTOH, if I ship a bunch to CA, I lose a little. It all works out though. Just be sure to recheck your average occasionally. The free shipping icon on your listings is a big subconscious selling help.
+1 I am pretty sure offering free shipping and 1 day handling also helps with your ratings and gets you better search results.
Also, I offer free "standard shipping" and charge a small fee for 'expedited' shipping, $5.99 on shirts, and $7.99 on coats and $9.99 on suits. I also upgrade everyone to expedited = priority mail as thats the only real way to ship stuff over 13oz, BUT I would say 1 out of 25 chooses the upgrade and pay a few more bucks
ALSO, if you offer free shipping CONUS and say $49 or $59 international shipping for a suit, you dont have to pay the fee on the $$ for the international shipping if you sell it international which is a big plus. Ebay knows you were offering FREE shipping to start with so they give you the benefit.