As a UK customer, I usually order from MSL who charge a reasonable €9.90 postage.
I recently ordered 7 signal kits from Schneider Modellbahnzubehör who charged a whopping €35 postage.
Is this level of postage costs justified?

I’m in the US. The postage averages around four percent on shipments of EUR 1,000+. I don’t order small items to be shipped by themselves, but I wait until my backorder justifies a shipment.

Sadly, EUR 1,000 is not a very large order anymore, what with engines 500+ and some rolling stock running around 100 each!

I don't know. I'll check the invoice/consignment note when it arrives.
The website does say Insurance is extra although there was no option to in/exclude it.

When it does arrive, I'll weigh it and then see how much Royal Mail would charge to send it back.

Unfortunately, shipping costs have literally skyrocketed in recent years due to well anything to be honest. Generally size along with weight are main factors then of course how fast. It all plays a part. In my job I ship computer systems. Fragile is huge as well. I generally rather ship shipments by the skid instead of by the piece. Surprisingly less damage by the skid as compared to by the piece. All of this factors into cost. Unfortunately, as time goes on more and more items are being shipped to your door and of course more people are using shipping services. In the end we pay for it.