I'll go out on a limb and guess most of you haven't worked in shipping. I cut my teeth working for an importer who sold online - and we nearly always lost on postage.
Here is how it worked for us:
I showed up at the warehouse in the morning, my boss had the orders printed out from 4 pm the day before to whenever I came on. I would divide the orders up into categories - type or order and how they were to be shipped.
Then I would pack all the small orders - which took time I might ad, no matter how small. To say that it is easy, well that isn't true. You are always thinking "How can I ship for the cheapest, yet have tracking?" To keep down cost, when we shipped Postal we only used USPS packing materials. Boxes, padding and envelopes are not cheap. Then the packer has to get labels done, on and ready to go.
The big orders involve packing, thinking and making sure nothing will be broken. And so on. I was not only the packer, I ran the phone lines, ran the warehouse and dealt with anything thrown at me - so going outside my normal ways meant I had to stop and use more time up. And...time goes fast. And you are looking at USPS showing up at 3 pm and UPS at 4....not a lot of time. The special need orders always got bumped to last for that reason.
Not every business has mail pickup daily. Many have to go to the post office to do this, which yes, cost time. And time is money.
We had one point where the postal person refused to pick up our mail, due to it filling their jeep. They also hated that most of our flat rate boxes were filled with granite mortar and pestles...hehheh. Those puppies weighed 15 to 30 lbs each ;-)Same driver ran his jeep into our warehouse door one day in anger...sheesh.
Most folks expected UPS delivery. We'd ship Alaska and HI orders via mail - and they were NEVER cheap unless one could get it into a flat rate box. Same with International and military orders. Military/International orders were never fun, customs forms and so on. Ate up more time - and had to be packed super tight. I always saved up the orders and shipped once a week for those.
So look at it this way: I hate having high shipping charges for my own business, so I try to keep them in line. But....an international order to say New Zealand? I can drop $15 to 30 without blinking. I have to charge what it will cost me. I hate charging $10 to ship one book, but it does cost $7 to 10 to do that for many countries + padded envelope + bag + my time to go to the post office. In the US I charge $3.50 for a book to be shipped. I HATE Media Mail so won't use it - any postal worker can open the package!! It cost about $2 to 2.50 to ship + materials. A padded envelope runs 25 to 50 cents each - but the person also gets first class with tracking. If someone pays in for the next level, I often ship Priority so they get it faster.
You win a few, lose on most. And no, the shipping charges are NEVER worked into the cost of the product, unless you are a mega company like Amazon. Smaller companies pay the going rate (the UPS discount mentioned by another poster is based on how many packages you ship a week, you have to really be pumping out orders to get a good one).