[willpower101]

I've had two types of free prime memberships for two years now and I buy tiny things like a $1.55 audio cable or a $1.99 grill lighter every week (sometimes every day.)

Ups actually offers insane bulk shipping discounts with huge retailers like amazon and newegg. The amount basically ends up looking like a quarterly fee on the balance sheets.

Then amazon uses fixed shipping costs for all their 'amazon fulfilled' items with few maxing out the base cost, this means that they may net anywhere from 0% to 90% profit on their shipping of each item depending on where it's going.

I'm fairly sure that at the $79 price point was chosen so that if every single customer switched to prime, they would still run a positive balance on shipping.