The limit is on the value of your items.
Since you do not get the shipping and handling (postage and packaging) money, it is not part of your limit.
Note that you do pay fees on the shipping and handling that you charge your customers.
Note also that your customers' cleared payments will not be released to you for 21 days after they pay. However, you must ship within 7 days to keep your Seller Protections.
When your buyer's payment has cleared you will be able to use the money to buy and print a Paypal shipping label. On some services these labels are discounted 5% to 17% off the PO counter price. So there's that.