Trying to understand UPS "set-up". Help!

I have my first functional site and it is up and online.

Presently, I only ship with UPS. My issue is that If a person who lives only 20 miles from my store, purchases a 1lb item from me, the cheapest method of UPS shipping is "UPS Ground" which will cost $15.38 for shipping. That is crazy expensive! Fedex is only 1 dollar less.

Does this sound right? Should I be oppering USPS? I really don't know what direction to go.

No one will want to purcase a $2 item, if it is going to cost $15 in shipping. And.... when I buy items on-line, the shipping is usaully considerably cheaper than that.

Could someone please steer me in a direction? I would appreciate it. Than you in advance.