That's the profit margin across all products. Consumers are not rational (or at the very least, not infinitely knowledgeable and able to use that knowledge inst

That's the profit margin across all products. Consumers are not rational (or at the very least, not infinitely knowledgeable and able to use that knowledge instantaneously), so you would absolutely expect effects like charging 4.99 rather than some tax-adjusted number like 5.18 to translate into real profits. Individual items can have >100% markup, there are items sold at a loss to ensure you can complete your trip at a single store or get you in the door or whatever, and the store absolutely has to consider how revenue (not just line-item profit) plays into things to balance out rent and wages and whatnot. 1-3% profits for the store don't imply much about what you need to charge to offset the effects of sales tax. As a brief example of irrationality, last I checked, on like-new iPhones it made a 30% difference in total revenue to offer "free" shipping rather than split it out as a separate line item. People would really rather pay 1.3x with "free" shipping than 0.8x base price and 0.2x shipping.