You create mods from components to equip. Depending on the level of the skill, that many mod points and mod slots are available.

Formula is is 50 * lvl points added for each level and one new slot every odd level.

Each mod that's currently active takes one mod slot.

Components come with a point cost and can be combined to create new mods. Linking components allows the mod to be cheaper or better depending on synergies.

Limiting components reduces cost but also usability. Enhancing components increases cost but also improves usability.

But the biggest cost factor is "thematic". When designing a mod, if the theme doesn't make sense, the cost skyrockets. Each mod needs to have a lore and if the lore sucks, the cost will easily quadruple or more. This is to prevent abusing loopholes and munchkinning.

If mods have appropriate themes with each other, they can gain minor benefits. This is to encourage diversity and spectacular visual effects.