I am not on here much anymore but I saw this and hope I could help a little.
Don't go by what those guys selling baits do on Facebook. Most of the ones I have encountered do not have a clue of income versus expenses. They are not getting discounts from the post office, they simply are not paying attention to their actual costs. That's why most of them are not in business very long when they realize they are costing themselves money. LOL. Those same guys are the ones not paying taxes (especially the F.E.T.), not doing anything legitimately, etc. The sad part is in our digital age, a lot of people look for the cheapest cost and run with it.
This is my method, I know others have different ones: I charge actual shipping (I use USPS) plus .75 to cover packing. Anything up to 15.999 ounces ships First Class, over that ships Priority. When over the 15.999 ounces, I start with Flat Rate Padded envelopes if it fits, then Medium Flat Rate, then Large Flat Rate. Most of what I do will fit in one of the above. All of the above boxes/envelopes are free from the USPS. You can pick them up at your local P.O., or even order online and they will ship the boxes to your door for free.
Every once in awhile I will sell at auction and offer "free" shipping, but I start the bids over my cost. That would be for excess baits, baits I won't be selling anymore, etc.
You can receive discounts from the USPS, but it is based on the prior year's volume. Which is:
First Class - 5,000 pieces in prior year
Priority - 50,000 pieces in prior year
Express - 5,000 pieces in prior year
Hope that helps.