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Judge Dred (Fred)There are so many different ways to go with shipping. I think that at a minimum, as a seller, you should at least do some type of tracking (delivery confirmation, registered, etc) on anything over $50. The cost for something like that is about $5 if you send it 3 day. That's about 10% of the value of the item sold. This is more protection for the seller. Having proof of attempted delivery to a certain zip code goes a long way towards relieving suspicion. The postal receipt (from the post office) typically has the zip code to where the package was sent.
If you're afraid that people wont bid on an item because of a perceived overage in shipping charges then put a $3 amount for the shipping charge and eat the $2. Seriously, a couple of dollars towards maintaining a good reputation as a seller is peanuts in the spectrum of it all.