I just unlocked the blueprint window! What should I upgrade? Edit
Whatever you like! Until you have multiple copies of the same blueprint, there's not too much you can do wrong here.
If you want a more concrete answer, try upgrading all the blueprints in your copper set to level 5. This will get you an income multiplier of 1.2! To learn more about how this works, see Blueprint Score. When you are done with that, you can do the same in your wood set!
When should I merge my blueprints? Edit
It depends on which blueprint we are talking about. For important blueprints, you want to wait longer. For less important blueprints, you can merge sooner to get some sweet multipliers.
It's easiest to think about your blueprints in 4 categories:
Early Game Blueprints Edit
Copper Ore, Bronze Spear, Leather Armor
Upgrade these to level 21 and merge merge merge. The faster you merge these, the faster you can rack up some nice multipliers.
Once you get these blueprints to tier 4 to 5 (a little IV or V in the top left) you are in the late game, it's time to start selling off the extra blueprints for lore to upgrade your Late Game Blueprints.
You are welcome to use a different set of products as your Early Game Blueprints, but make sure you have at least one in each of the first 5 sets.
Late Game Blueprints Edit
Wood, Rawhide or Leather, Copper Axe, Tin Ore, Coal, Iron Ore, Gold Ingots, Gold Necklace, Magnificent Hilt, Magnificent Armor
Wait to merge these blueprints until they are at level 51. It may take a long time before you gain the ability to churn out lore quickly enough, so don't worry too much about these blueprints yet. Just make sure you don't sell these blueprints because you will want them later!
As you start to earn lore faster, and you have more lore than you need to merge the Early Game blueprints, you can start upgrading your late game blueprints. If you can get two Late Game blueprints to level 51, go ahead and merge!
You are welcome to use a different set of products as your Late Game blueprints. In general, this set should include the most of bps that you consistently build in your workshop, and should include at least one product from each set (to max out the achievements)
Event Blueprints Edit
The blueprints that come from events are rare, and shouldn't be merged or sold off until the end of the event. After the event ends, you should assume you won't get any more copies of those blueprint, and decide how you want to merge them based on the bonuses being offered.
All Other Blueprints Edit
The main purpose of upgrading and merging these is for small gains in the log portion of the blueprint set score formula. They are your last priority in terms of spending lore. The best thing to do is to upgrade them all to around level 11 and sell off the extra copies to get extra lore.
If you get to a point where you have extra lore and want to spend it on merging these blueprints, upgrade them to level 21 and merge up to tier 3. There is really no point in ever going higher than that.