Sending items as a large letter.

Ok so Ive started selling small light items,  Ive done my research and seen that everyone else is selling the same thing as a large letter or stamp mail in a padded envelope.     Go into the post office today to post an item and see how many "stamps" ill need.   Guy tells me oh no thats a parcel rate.    Argue it with him,  he pulls out the slot measure and makes a feable and failing attempt to push my parcel through.    Show him another item which would clearly fit,  oh no thats a parcel too.    What gives?      I know Auspost is privatised,  are they making more money making sure small items do not go through as large letters.       I know my first mistake was taking it to a teller in the first place,  but I dont really want to be sneaking my items through the mail as letters either.


However,  I cant sell this item with 7 dollars extra postage tacked onto it,  I just wouldnt be able to compete.      So the only other thing I can think is to get some stamps and just put it myself in the red box, and squeeze it through right and proper,  but now do I run the risk of having it returned or my customer having to pick up the cost on the other end.


Any advice,  comments?