If the auction is free shipping, it means you as the seller will pay for shipping out of pocket. You'll usually gain more credits, but you're footing the shipping cost yourself. If the auction is winner pays shipping, then the winner chooses a payment method you can accept and pay you that way. You don't ship the item until you have the shipping cost from them. Commonly accepted payment methods are Paypal (the safest method), money order or concealed cash.
To find out how much to ask for if it's winner pays shipping, you'll either want to package it up, go to the post office and ask for a quote, or if you have a scale, you can get an estimate online at the USPS website. http://postcalc.usps.gov/
For your item, there's two ways go to about it, First Class or Small Priority Flat Rate box. First Class will be cheaper (no more than $4), but you'll need to supply your own packaging materials. A Flat Rate box ($5.20 to all users in the US) will be more expensive, but you can just pick up the special box for free at the post office.
You'll want to highly consider getting delivery confirmation on your item. It's an extra $0.80, because you as the seller have to show proof of shipping. Delivery confirmation is the best way to do it because you can track the package as it makes it's way to the winner.
Right now your auction is set at local pickup. Once you've determined what you want to do with shipping (winner pays shipping or free) and a shipping cost (if there is one) let me know and I'll change your auction. If you have any questions, let me know. Good luck!