Most of our items go by untracked large letter as theywill fit thru the 2cm thickness gauge. We have no seller protection, therefore if a buyer says they did not receive their item we just send out a replacement item after asking them to check a couple of things.
We resend about one in 1000 items so for us it's worth the risk.
Other than this you are up for the 500 gram parcel rate you already know about unfortunately.