Get some estimates for a shower redo in its 30 inch size from a licensed contractor, including permit costs, and with the understanding there'd be extra charges to repair the currently invisible damage. Then talk to three real estate agents about what is expected in your area.

So the answer is yes, fix the shower for $500.

You don't want this to be an issue in the inspection.
The alternative is you say "I'll give you $500 at closing" and call it good.

It's probably better not to have it be an issue at closing and just deal with it now.

How big is the house? If it is 3000 sq ft then yes the small shower will be an issue if it is 1000 sq ft then probably not as much. No matter what fix it a as buyers will subtract a high cost for anything that needs fixing. If it looks like it needs remodeling they are likely to guesstimate 10K for the bathroom vs. your actual cost of 5K. Just something to keep in mind as well.

You will need to replace the cracked shower pan. That should be doable for $500, but not sure about a renovation, unless you are very handy.

Some jurisdictions do not need permits to merely replace what is damaged. If you aren't moving walls, you can get someone to do that.

I think there is a psychological issue with trying to sell a home with obviously broken bits because people will assume that there might be other neglected maintenance which is less obvious.

Unless of course you are pricing and selling as a fixer upper and price accordingly.

A broken shower pan is quite different (at least to me) that worn flooring for which an allowance makes sense. Everyone accepts that carpet or floors need replacement and most people I think would prefer the option of selecting exactly what they want for their floors since they are an important decorative decision.

Guess I'm different, not surprised there ... two years ago I sold a rural property and needed to find another home quick. I ended up buying a 1950's ranch in a great neighborhood that already had a contract on it, and had a leaky bathroom shower.

The seller wouldn't fix it, since the other buyers were buying it "as is" .. and I wanted the house. This was not a fixer upper house, the rest of the house was in good condition.

I called it the "coffin" shower since it was so small ... and ended up enlarging it by taking part of the bedroom closet to do so. So I now love my shower!

If your area is a hot sellers market, you might not have to do anything .. in my area, there is very low inventory even 2 years later, so a house with a broken shower pan might not be such a big deal.

apple_pie nailed it.

In my area a cracked shower pan would generate a huge discount on offers, significantly more than the actual cost of repair. It is well worth it financially (here) to properly repair it prior to putting it on the market. You don't want to get a $10k reduction is sales price for a $500 repair...that would be foolish IMO.

Check with the Realtors you interview to find out what buyer expectations are in your area.

Thanks everyone! I’m already thinking of ways to stage it so people would want to use the shower, even though it’s small. Fun little project once you get into it.