I have been passing my shipping discount on to my buyers for years. I usually do auctions with calculated shipping cost charged to the buyer, and the lower shipping cost they see, the higher they will most likely bid on my auctions. So I feel that the discounted money I lose by giving it to my buyers comes back to me when they bid a little higher, figuring that most buyers nowadays know that their final cost is price for the item plus shipping.
As far as free shipping, don't even get me started. Free shipping is nothing but a lie because there is no such thing, and the idea of it just promotes BIN listings with the shipping cost built in, aka hidden. Free shipping has all but killed the one thing that put eBay on the map to begin with, AUCTIONS, and it will eventually wipe out all of the smaller ma and pa type sellers when all buyers finally smarten up to the fact that there is no such thing as free shipping.
Now that auctions are almost dead, I find myself unfortunately having to do more BIN listings with Best Offer, playing the deceitful game of hiding my shipping cost into the BIN price and calling it free shipping, ugh.
I use the auction format almost exclusively and almost always use calculated shipping and I don't have a problem making sales. I don't pass along the shipping discounts to the buyers since I have found that any savings between the retail price the buyer pays and what the label actually cost me is consumed by the eBay FVF's on the shipping and my packing materials.
That being said since shipping costs can vary drastically based on the buyers location prior to actually shipping an item I will look for opportunities to save the buyer some on the shipping cost by looking for alternative methods to ship the item without impacting the delivery time or service. This generally happens with ground advantage items, which is my default shipping method, but I find that I can ship the item cheaper by priority mail using a flat rate envelope or box or by using ground advantage cubic or priority mail cubic. If the difference is significant I simply notify the buyer and issue a shipping discount refund.
