Scenario One: I want an item I see that's worth $5 and it's listed at $4.99 plus $3 shipping. If I DON'T take time to review the shipping costs, I'll most certainly bid on the item.

Scenario Two: I want an item I see that's worth $5 and it's listed at $6.99 plus $1 shipping. Because it's almost $2 over current value, I'll more than likely will not bid on this item.

The end result may be the same "monetarily" to the seller... however, the end result most likely wouldn't be same to the buyer (bid with high shipping... holding a grudge against the seller, or not bid with high starting price... no grudge to be held against the seller). I think the most "ethical" method (and most honest) is to absord the auction fees, etc., in the listing and then charge the appropriate shipping & handling fees once an auction closes. To hide "mark-up" and "profit" in the shipping charges seems a little less ethical to me!

Ultimately, the buyer needs to review every aspect of a listing (There are FOUR... count them... 4 different areas in EVERY listing where a seller can list their shipping charges!)