s.   When free post is offered, (and I do include the full cost of postage and handling in the cost each individual item): I work out the actual cost of postage for all items being sent then deduct any over-paid postage and make a refund of that amount.

the only problem is that when you offer free postage you are paying eBay fees on the total price, which is the reason eBay does not allow to reduce the price.  So you not only pay FVF on the postage, if you refund the postage you are paying FVF on money you did not get.  Of-course, it depends what you sell and whether your postage is 60c or $12.