I'm running 0.77, and have a three units of 5 figures each that have been keeping my questing sovereign company throughout the game. They're equipped with shortbows, leather armor, and warhammers. They're woefully behind the times in equipment. But hey, they're also level 11.
No problem, right? I designed these units with upgradeable equipment. I'll get whip up some gold, and buy them new gear to get with the times. It's just one upgrade step -- maces, chainmail, and longbows -- but it should be a nice bonus. But when I go to do this, the cost is absurd. Rush-training a new five figure unit of this type from scratch, with top of the line equipment, would cost 709 Gildar. But upgrading one level 11 unit of this type, with five figures, trading in their leather armor for chain, costs 5960 Gildar. What. I don't even. That's not even including the weapons. It's almost as expensive as if they were paying the shop prices to buy that armor on five heroes! And I have another infantry unit to do this on, plus an archer unit that needs new bows. I can't possibly afford that.
The problem appears to be that the upgrade costs scale with level. I guess this is intended to be a balance thing. I understand the sentiment, but it's misguided. Retrofitting the veterans that you have painstakingly kept alive and nurtured, so that the time and experience invested in those troops isn't squandered when higher tech units come out, is the most important purpose of an upgrade mechanic. It's what makes veterancy and research mechanics play nice with each other -- without being able to do that, new technologies would trash your hard work. Punishing veterancy by making them more difficult to upgrade undermines this. It's not realistic (I'm just re-equipping the troops, not replacing them), it's frustrating (why am I being punished for good play?) and it's not standard for the genre (Civilization, for example, charges flat upgrade costs by unit type, regardless of veterancy).
Upgrades can and should be expensive -- I'd expect the full rush build price of the new equipment, maybe even with a markup for retraining. Modernization should be a proper strategic choice and investment. But I strongly urge that they NOT be escalating price based on level. Just as you want to encourage players to put their best gear on their best heroes, you should be encouraging players to focus their upgrades on their highest level troops. Under this system, you're doing the opposite.