You can make a lot of money as an Ebay seller. But only if you know what you are doing. There are a few traps that are easy to fall into. These traps will either kill your business, or eat all of your profits.
The Community Pages
Ebay has a community section where you can post on message and chat boards that are geared towards a wide variety of topics. One of the biggest mistakes you can make is to use these boards. Imagine if everytime someone downvoted you on E2, that you would lose money instead of XP. That is exactly what will happen to you if you express any sort of opinion on one of the Ebay message boards. Read the message boards if you wish (chances are someone else already asked the same question, or expressed the same opinion as you anyway), but do not make the mistake of using them.
Shipping and Handling
Do not try and make a lot of extra money from handling charges. This will come back to bite you in the form of negative feedback (or much, much worse). I tend to do exact shipping cost on larger, more expensive items. While using a fixed shipping cost on smaller cheaper items. In the long run it is best to charge exact shipping, or exact shipping +$2. That way there is no confusion as to what your policies are.
Avoid selling these items
Some items are just nothing but trouble. I have sold a variety of things on Ebay, but all my problems came from a few small categories. Mainly music CDs and video games for modern console systems. The majority of my non-paying bidders, and my negative feedbacks came from the people buying these items. These items are only worth it if you sell them in huge numbers, and I do mean huge. Most bigtime CD and videogame sellers have a lot of negative feedback (1 to 3 percent or worse). It doesn't bother them, because, lets face it, people see that 1000 total feedback and don't even bother to check the real numbers. But it just isn't worth messing up your perfect feedback to sell a couple of $3 items.
In general you should avoid anything that attracts teenaged bidders. Music CDs, console games (newer consoles only, bidders on classic console stuff tend to be older), N-Sync stuff, etc. You could sell 100 coffeemakers to 30 year olds without a problem, while you would be lucky to sell 10 Playstation games without at least one non-paying bidder, negative feedback leaver, etc.
Don't sell collectibles unless you are familiar with the hobby. About a year and a half ago (back when I was a big Ebay seller), I saw a woman (who was already a successful seller), move into selling Beanie Babies. That was a big mistake for her. Apparently she smoked, and no one bothered to tell her that Beanie Baby collectors apparently like to smell their little stuffed animals. She ended up having to close her account and start over (because of the negative feedback, and pissed off beanie freaks screwing up her auctions).
Label your auctions correctly
Try and know what you are selling. I just bought an arcade spinner control for $5.00, that is not a $5.00 item, they are about a $30 item. Why did I get it so cheap? Because the seller labeled it as "Vintage Pong Controller". Now I couldn't imagine someone who wanted a spinner typing any of those words into search. So no one who was interested ever even saw it. I got it at the opening bid of $5, instead of the $30 that spinners consistently bring in (I got my Shark Jaws arcade game from a similar labeling mistake).
Finally, don't get suckered in to all those extras.
Ebay has about 10 million different things that are designed to suck money out of you. Bold listings, featured auction, slide show, etc, etc. All that extra crap can add hundreds of dollars to the cost of running your auctions, without producing hundreds worth of results. The fact is, people are going to search for what they want, that $2 extra you paid for a bold listing isn't going to do a damn thing. The same goes for paying Ebay to host more than one image for you (just combine all your pictures into one image file instead). The only exception to the extras rule is when you have something truly special. It is worth the $100 for front page featured auction if you are selling Elvis Presley's tombstone or something, otherwise it is just a waste of money. (One thing I see a lot of is people who pay the hundred bucks to get their dutch auction of "random $4 item" featured, and then end up only selling 10 or 12 of the item). If people want your item, then they will buy it, period.
Good luck on your auctions everybody, and if your 99 cent CD ($8 shipping) front page featured auction doesn't go over well, don't say I didn't warn you. =)