Basically we pay Amazon $1 or 15% of sale (whichever is higher + ~$2.50 for shipping before anything else, so after margins and what not that's a minimum of $4 going to Amazon for marketing and logistics. That's why low dollar 1-pack items feel like price gouging -- there's been years of A/B testing on the marketplace that shows a $4.99+free ship item is way more attractive than $1.99+$3 shipping.

Amazon itself sells stuff direct from manufacturer at a loss or breakeven-ish cost for items under $3 because they can, but even those prices aren't hugely sustainable and they play around with algorithmic pricing themselves over time.

Retail logistics for low dollar items is a Hard problem. :|