The creators ate the Paypal fee (usually 4-5%), and then Patreon collected an additional 5% for simply coordinating these exchanges with their service.
I doubt there were many people who only pledged $1 to one creator and that was it. But if that was truly a problem, then sure, one 35-cent charge per month would be reasonable.
A $1 pledge, to me, is a way to say "I enjoy your content. I want you to keep doing it, instead of needing to quit and get a 'real job'. And I use adblock so you aren't otherwise getting any benefit from my enjoyment.". When 1000s of other people make the same $1/mo decision as me, the creator has a stable income, and they create more and better content, which is good for me.
When throwing in five bucks or more especially per creation I am like "you are one of my favorite musicians please give us more" (and then I put in Taylor Davis' Carol Of The Bells and just feel good).
Patreon decided that they were SICK of supplementing all the $1 pledges, and added a new fee schedule. The internet, was too short sighted to care about this economic reality, and so they were forced to burn with fees once more.