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Weapon upgrages are available at the Armory. There are four different upgrades that can be combined with each other to further improve weapons. They apply to most handheld weapons you use. Each upgrade costs 5,000 Credits. While leveling up you'll unlock damage boosts that stack with upgrades.

Stopping PowerEdit

Increases the weapon damage by 25%. The spray and pray upgrade is better in regards of damage per second, but stopping power reduces ammo consume and makes your supply last longer. 

Spray and PrayEdit

Doubles the rate of fire. The damage per second doubles, but you're also reloading more often. Still, this is the most efficient upgrade in terms of damage output.

Getting a higher rate of fire makes no sense if you're not using automatic weapons or weapons with a slow rate of fire.

This upgrade does not improve Laser Rifle, Longbow and Ion Blade.

CowboyEdit

The Cowboy upgrade makes reloads take half as long. This is only interesting for weapons that don't work with the quick reload trick, namely the Rocket Launcher and the Gatling Gun. For the rocket launcher it improves the overall damage output almost as much as stopping power does. The gatling is reloading so rarely that it makes little difference.

Double UpEdit

Doubles the clip size of all weapons. Since you're reloading only half as often, you can spend more time shooting. Surprisingly this has significant impact even when doing quick reloads, but spray and pray and stopping power are often the better choice.