Get the Chinese sellers right out of your head.
Their manufacturing cost is risible and the Chinese government heavily subsidizes the cost of shipping, unlike our own.
And sadly, some just don't ship anything making their money because customers forget the pennyante purchase and/or don't bother to complain when nothing shows up.
Look instead at your costs and your buyer's total invoice.
You need to cover your procurement cost (on a $5 item that should be less than 50 cents)
You need to cover your eBay and Paypal fees (about 20% of your buyer's payment, perhaps more unless you are using PP micro-payments)
And you need $10 to cover the cost of shipping.
Which is cheapest ?
A $5 item with $10 shipping?
A $10 item with $5 Shipping?
A $15 item with Free Shipping?
Yes, they are all the same item.
Yes, the buyer probably knows that shipping is included in the cost of the Free Shipping purchase, but she likes it anyway. And she will convince herself that your '$15 ' item is better quality than your competitors '$5' item.
Also, frankly the person who pays a fair price for an item is a nicer customer to deal with than one who is a bottomfeeding bargain hunter.
And for you, the fees will be a little lower with 'free' shipping, including no shipping FVF on items shipped outside of Canada even if you were to send Overnight Lickety-Split GoldPlated Express with Signature Confirmation and insurance.
So my advice would be to put the item up at $15 with Free Shipping.
Remember you also get a break by buying in loonies and selling in USD. As a new seller, you have been guided to the simplified Sell Your Item form. Look at the Site Map for the Advanced SYI form that allows you to sell in US dollars. Voila! You just made another 15-20% on your sale!
I'd also offer the unwanted advice that you not sell this item on eBay. The value is too low unless you are fairly sure that most of your sales will be for multiple items. (This happens in sportscards, beads and scrapbookng for example, where customers will order dozens of $1.00 items to be shipped together. Each sale would be a money loser, but the total sale is profitable.)
In my opinion, if an item can't sell for $9.99USD, it will not be profitable.
There are also items that sell at a decent price, but packaging and shipping the bulky item makes the profit disappear.
