By doing the method what i had explained, you can literally increase the order value per purchase.
I agree. Artificially creating shipping/handling costs, and even giving "free" shipping triggers shoppers into buying more.
After all, a buyer feels like he's saving money by buying more items.
Even if they just spend an additional $5 to cheat out of the $4,95 shipping costs, it's a good deal.
Your net margin might be slightly lower due to the purchase price of the $5 item, but your buyer will feel like having gotten an awesome deal.
Definitely something I'd like to see implemented!