PSA SMR Priced Sets
 

Does anyone else wonder how PSA comes up with set prices in a specific grade?

For instance, a 1963 Topps set in PSA 5 list for $4660. The least you can pay for grading is $8 each historically which would equate to $4608 in grading fees.

That would mean the cards aren't worth anything.

Looks to me like only very high grade sets would ever make any sense grading the entire set.

They're based off the sum of the (heavily outdated) individual card values in that grade. And you are correct, collins are only worth grading if NM-MT or above, which seems to get harder every year based on changing PSA interpretations of their own standards. Ask the people who grade 1971 Topps or 1975 Minis if they're giving harsher grades out the past few years.
And currently, the cheapest level you can send to PSA for grading is $200 per card. But grading fees really have no bearing on what someone will pay for a PSA 5 common.