Increase prices, charge shipping, outsource?

Our business has done well over the past few years, but the rising costs of everything is starting to take its toll. Our items are handmade. i’m faced with 3 options.

1) Increasing prices: I charge $4.99 per item. Generally people either buy one or buy a lot. Generally, people are fine with the price, but I get a few complainers. Going over this would affect our shipping model because of the $10 VTR exemption that we take advantage of..(see #2). I also make these items myself so I need to get paid for my time.

2) Shipping: right now our items ship via letter mail unless order is over $10 (about 1/3 of our orders) and about 10% get lost in the mail or get returned to us. Some I suspect are lying, but with no tracking I have no proof. If people buy 3 items, we ship with tracking costs $4.53 regardless of zipcode of recipient because of our location (so basically the third item pays for shipping). Charging for shipping could have 2 possible outcomes a) people buy more since they are paying for shipping or b) they don’t order at all. I can’t seem to find a way to advertise that shipping is not per item but per order.

3) Outsource: Get them made offshore and drop prices and go for volume. I’ve tried this but have never been happy with the quality. Since they are my designs I take pride in the product. It costs less to make them myself, but again, I need to charge higher price for my time.

FBA is not an option. The fees are not worth it.

Any feedback on these options or other another route would be appreciated.