ya thats what i thought, which is why i rarely sell things w/ free shipping anymore but i try not sell w/ shipping cost higher than actual cost b/c im afraid it might scare off customers.
Certain Items I pad an extra dollar or two S+H to with the promise I am shipping in a well protected box, and shipping every day of the week besides Sundays so at least the buyer is getting something for their extra dollar or two. Over hundreds of items this adds up to hundreds of dollars that are not 'fee taxed' by Ebay.
Also I do not believe it is immoral or scammy in any way. I spell out in both my auction description and the shipping calculator what shipping is..it is a suprise to no one and if buyers do not agree than they shouldn't purchase. They still usually do though as I give them exactly what I describe in an extremely quick shipping time..something most Ebayers can't do these days..so my DSR's aren't really suffering either.