Please understand before you start flaming me. I do not Buy from EBay; I'm neither for it nor against it. With that said....
You gouge on EBay by putting an item up for an extravagant price. If it doesn't sell, you re-list it for an even higher price. Pretty soon, all of your re-lists (that still haven't sold) become the 'normal' price for an item. So then, you can sell it for more than the original listing, but less than the current one and people think it's a good deal....After all, there was one listed for more than what you asked for, right?
You can also have fun by getting a buddy to bid for you. He offers just a bit more than any sane person would, so people will think it's a good price - And he buys it from you (with great feedback) with your own money. (Hey, you gotta pay the fees anyway). Now you can list it again, and when people ask for a reasonable price, you can point out that it sold for about what you want not that long ago, so if they really want it....
There are always going to be people who get caught up in the auction part of it, too. People who know better, but can't stand to be outbid. Even if it's by your friends, trying to get more than an item is worth.
Mind you, E-Bay has a place. It's just not where I would actually buy anything.
And, btw, e-bay prices are *not* normal prices for things. Auction means 'get the most you can', so anyone saying that's what it sold for should think about it. Just because someone pays $1 Billion for a painting at auction doesn't mean it's worth it to everyone. And paintings are unique, one of a kind objects, not 1 of 100,000 released video games.