I believe they just get a commercial rate from the USPS and they add a small percentage onto each transaction for themselves to make their money.

USPS, UPS, FedEx, etc. all charge consumers "retail" prices that have very high profit margin for them. Businesses negotiate significantly lower rates that are closer to the real shipping cost. Pirateship acts as a broker, allowing people to access those lower negotiated rates.

They use Cubic pricing which Usps offers to high volume customers.