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And just to further explain more about it. Say you have a elemental gem that converts damage to fire by 30%. When you combine that with a enhance elemental by 20% then it'll convert damage to fire by 50% if that wasn't already obvious.
I added an ice gem that'll convert my weapon damage into ice damage by 28%. It shows 29% under the dps of my weapon(I dunno where the 1% comes from). Then added a 24% damage converted to elemental gem to the weapon. The 29% under the weapon dps is now 53% ice damage. So as far as I can tell it literally adds the percentage on top of whatever % your fire, ice, shock, or toxic is.
1. http://steamcommunity.com/sharedfiles/filedetails/?id=781791218
2. http://steamcommunity.com/sharedfiles/filedetails/?id=781791227
There's the screenshots for you.
For a high ROF weapon like the Sidekick, you need at least 50%+ of your damage converted into elemental damage for it to begin to register elemental effects. This is less for heavy hitters like bows, shotguns, and revolvers/handcannons. The effect itself is largely based on the amount of elemental damage inflicted, so using a full auto weapon to inflict Burn status will make them light up nicely, but it won't do as much damage as a Revolvers' burn effect.
%damage conversion only converts damage to an elemental type, but doesn't increase your damage overall at all.
Bonus damage is just that, it adds a lil' extra elemental damage on top of what you have already.
Effect Vulnerability improves the odds of an elemental effect like 'shocked' or 'burning' happening , assuming you're capable of dealing enough damage to enable the effect.
So.. while, say, a Yuri can get away with one fire gem to sometimes see enemies light on fire, the Sidekick needs a near total elemental conversion. I've had some surprisingly good results electrifying an Einhorn. Once it crossed the 50% threshold with Conversion/Bonus upgrades, it started actually doing work and was good enough to tackle Bunny Lords with surprising safety.
I also believe being on Hard or higher difficulties has a diablo-esque effect on how often elemental effects will trigger.
This tends to make Elemental upgrades a LOT better overall than the stock gun upgrades, since they don't ever come with drawbacks, and usually come with singificantly better damage gains as long as you don't 1-in-4 yourself into shooting the wrong guy with the wrong gun.