Hi breemdog-
There are a couple of factors at play with your question here, one related to PayPal and one to your overall business model.
Let's address the PayPal one first: PayPal's fees are consistent per transaction, although slightly higher for a payment sent from another country. And, your fees can go lower with volume if you apply for PayPal's Merchant Rate after reaching a volume of $3K or more per month. More info about these things can be found in our Fees link.
Additionally, if your transactions are always going to be in this price range, PayPal does offer a different fee structure for Micropayment accounts. You can't toggle between the fee structures on the same account, so you'd have to have a separate account for those payments. The micropayment account fee structure is 5% + 5 cents per transaction, and you can find out more about that here: https://micropayments.paypal-labs.com/
The second aspect of your question is about your fees exceeding your profits. While it's not a PayPal question, have you considered changing your pricing structure? Are similar or identical items on eBay selling for the same price you're offering? eBay does offer some research tools like Completed Listing searches to show what items are selling for.
This may be an ideal question to ask of your peers here in the Help Forum as its own thread...there may not be a single right answer for how to help lower your costs and maximize your profits, but I'm sure there are others who may have thoughts on selling low dollar-amount items.
Thanks for stopping by the Community Help Forum.
PayPal Jason
