Gear upgrades | Items Dragon's Dogma Guide
Last update: 11 May 2016
Virtually any element of your equipment can be upgraded - both weapons and elements of armor. To start the upgrading process, you need to go to arms dealer (the icon of crossed swords) in some of the cities (such as Gran Soren). By selecting the appropriate dialogue option during your conversation with the merchant, you access the upgrade screen.
There are three upgrade tiers for each of the items. The first one only requires a money input, the following ones also require an additional item. You do not need to upgrade the item by stages and you can upgrade it to the top level straight away. However, if you upgrade the item by one tier, this does not reduce the cost of the higher one, which is why it is best to upgrade items to the third level straight away. Since the cost of upgrades is steep, you need to make sure that the item to be upgrade is worth that - instead, it may be better to invest your resources in a better version.
The situation is similar in the case of crafting, you do not need to carry around upgrade materials. You can deposit them with the innkeeper and still, if you own the material, it will be available to you at any moment.
Interesting fact: items actually can be upgraded beyond tier 3. This is not easy though: to do this, you need to kill a dragon (or a wyvern) and this will let you upgrade one item in your equipment (and also wins you the Dragon Forged achievement).