I would say that you are shipping for free or part of the shipping cost is coming out of the items selling price. Big loss.
Lets break it down:
.60 cents for postage.
.55 cents if you send it delivery confirmation, (I do with all chips, Have had many people claim not received before using this.)
.25 cents for a bubble envelope.
.5 cents for tape and bubble wrap on chip.
.10 cents for gas to the post office.
If the payment is through Paypal they are taking their fee from the shipping payment as well, so part of the .30 cent and 2.9% fee are taken from your $1.

For the record I charge $2 for the first chip and .50 cent for each chip after that.
Wow! Looking at the numbers I might need to the raise my shipping price.