Seller sets the fee. You can set it to a fixed number or set it up to pull in the actual shipping cost based on zipcode and then add a "handling" fee on top of the actual shipping charge.
I'm sure a lot of folks do this hoping to attract folks who don't look at the shipping charge, but the reason most sellers do this is because the eBay fee is based on the sale price only, not the shipping price. So this guy only pays a fee on a $60 sale - not a $120 sale. It used to be far more common, so I'm assuming eBay cracked down on the practice to a certain extent.
Ebay charges their fee on both the selling price AND the postage. They started this several years ago to stop sellers from selling for a low fee and high postage.
The ebay postage thing sometimes gets quite expensive to the seller. If you don't do flat rate shipping because the item won't fit (like these socket cases), calculated shipping can get quite high if the buyer is far away from the seller. These days of hidden shipping costs built into Amazon and other retailers (who negotiate wholesale lower rates anyway) has made buyers unaware of the real shipping costs incurred by sellers.
If I charge $7.50 shipping on ebay for a small flat rate priority box, I pay about 10 to 11 percent to ebay on fees on that shipping, and then 3% to paypal. Ebay discounts that shipping to me to $7.10 from the higher post office rate; but with the 14% ebay fee, it ends up costing me $8.15 to ship the item; so I lose $.65 on the shipping, when the buyer thinks I'm making $.40. To break even, I'd really have to charge $8.25 for small priority mail shipping. It would look to the buyer like I'm gouging them for $1.15, but in reality I'm charging them my actual costs.