To use it as a bag-space creator, simply send excess items to the bank alt whenever you're near a mailbox for a low price of only 30 a slot. Even if you accidentally send the wrong item to the bank alt, it can be returned-to-sender for free. It's very quick, due to the fact that sending mail between characters on the same account is always instant.
When assigning a selling price, do not aim for too low a price that would give you too little profit, but certainly do not assign too high a price. Too much greed is never a good thing, and the AH is filled with items that do not sell due to excessive inflation. A very common tactic in the AH is to sell for lower than what another player is offering, and many players make a lot of money that way. Similarly, losing sales thanks to being undercut is never fun. Aim for as low a price you can that will still make you a good profit. If you can keep producing the same item over and over, sell cheaply yet make a good amount of the item, you will reliably make a lot of money by volume. Moving inventory is the best kind of inventory.