Personally, I think eBay's recommendations can be taken with a grain of salt. Perhaps even several thousand grains. 

I've had them tell me to lower the price on items that were $40 to $4 (wouldn't have even covered material cost for that), and all it's based on is selected data matching, which then auto-generate the recommendations, so there's no actual thought going into it, just a computer program looking at broader data.

in saying that, raising prices can - at times - be an effective stratgey. If people are comparing two (for all intents and purposes) identical items, some will buy the cheapest overall item, others will buy more expensive ones due to other requirements and / or perceptions (as in, much cheaper prices can be suggestive of things like lower quality, or it's a seconds / defect clearance, even if there is nothing else to indicate it differs in quality to the more expensive item).