That's why my boss doesn't ship priority mail. The business ships media mail. He stopped doing priority just before all the fee changes went into effect, and we sure don't miss it.

But ebay does allow you to charge more than $4 for shipping -- you just have to print your shipping labels through them to do it so they can prove that yeah, it actually cost more than $4 for shipping.
I moonlight and sell some stuff on the side on ebay from home, and I tend to do first-class mail (through ebay, it comes with a tracking number, so I don't HAVE to ship priority). I charge $4 for shipping, the actual shipping costs me usually about $2.70, the padded envelope I ship in costs me about a buck, and I figure the leftover 30 cents covers the tape and paper/toner for my printer. Course, the stuff I personally sell doesn't start at a penny, because I gotta cover costs. (My boss can do penny auctions because of the law of averages -- when you've got 800 new items going up every day, seven days a week, some will sell for a penny, and some'll sell for $30, so it all balances out.) I don't have that kind of personal stock, nor the time to handle it all, so I can't do that for my own stuff... but it works fine for my boss, and he's got a good customer base.
Still, my point was more that ebay isn't all bad. There's some great people on there, and there's some quality stuff on there. You just have to be careful who you're buying from, which is the same thing as you have to do anywhere else.