Here's something that I found at one website that rather pertains to this issue:
What's your minimum order? And why do you have a minimum anyway?
A. Our minimum is $10, with the option of ordering less and paying a $3 handling fee.
It costs us about $2 to charge your credit card, and it costs about $3 to print your order, pull your item(s) off the shelf, check your order, and pack it up. This doesn't count the cost of cutting fabrics. And of course, we had to buy the item you're buying, and pay postage for it to get to us. With that kind of overhead, orders under $10 just don't pull their own weight, and would cost us money to process. We want to stay in business. We hope you want us to stay in business, so please forgive us for imposing this minimum. Since everything we sell is at a discount, and since adding a small item or two usually does not increase your postage charges, we hope it's not too much of an inconvenience to add a spool of thread or pack of needles to your order if necessary.
If you do place an order under $10, you'll pay a $3 handling charge, plus shipping. You'll have the choice of shipping by First Class, which can cost as little as $.43 for one pattern. That way, if you really just want a $5 item, you can pay a total of $8 to $10 for the item, the handling, and the postage. We still don't think that's very economical, but it probably beats driving to the store to pick up the same item, especially if you don't live near a quilt shop.
This would be mostly true, I think, except for the part about costing $2 to charge a credit card. It's more like 35 cents plus 3% of the order total. Which, for a small order, like a half-yard of fabric, is a pretty significant percentage of a unprofitably small sale!