There's been a lot of confusion about luck lately among people I've talked to. I've tested with luck a lot and have been part of numerous forum discussions lately regarding it. This is the best theory I (or anyone else) can come up with regarding luck damage. I'm doing this from a physical damage point of view but it holds true for magic damage. Just replace ATK with magic attack, strength with int, and defense with resist - Although I think 1 resist drops magic damage 2 points.

First... let's look at a regular hit that doesn't critical. Here's the best formula I can come up with...
[(ATK+special attack damage)*elemental factor - target's defense] = damage dealt

Here's a description of all the factors that come into play...

Elemental factor is either .5, .75, 1, 1.25, or 1.5 depending on the situation
.5 = using your water epic on an earth mob
.75 = using a regular weapon on an earth mob
1.0 = using water epic on water or wind mob or non-ele on non-ele mob
1.25 - using water epic on regular mob
1.5 = using water epic on fire mob

ATK = your attack. For most classes, this is your strength times 1.3 plus your dex times .2 plus your weapon damage (including assault lapis and the like). For magic users it's 1.3 times int +.2(wis). It's also different for archers using a bow, 1*str + .2+dex+.3+luck.

Special attack damage = damage from skills. Demon hushing, magic spot, and Turbulance are all skills with special attack damage. It also includes buffs like support spell and leadership.

Target's defense = fairly self explanatory. Resists for casters (times 2 I think).

Finally, if your normal damage would be mathematically zero, the game lets you hit for a random amount between 1 and 10. Like if an int mage melees a rec defender and hits, he'll still hit for 1-10 damage.


Okay, now let's look at crit damage. I assume you know about crit rate.

Crit damage, to the best of my knowledge and tests, is equal to the following...

1.5*[(ATK+special attack damage)*elemental factor - target's defense]+(your luck)(a random number between 0 and 1.5)

This is the same as saying...
1.5 times your normal damage + your luck times a random number

It's important to note this luck times a random number ignores the target's defense and elemental factors. So... say you have a luck priest with zero strength... (I happen to know one well)

When the luck priest hits a relic with about 1000 defense, I hit from 1-10 damage with my about 200 attack. Most people are in this same boat, except for high level fighters. However, my luck of about 500 lets me hit for a random number between 1 and 750. Any points I put into strength to melee relics would be wasted until I got over 1000 attack (not going to happen, this would be a garbage build). Note that this damage doesn't depend on the element of the tower, I can melee the earth tower with my water staff for up to 750.

However, against a low defense target (a noob pure int mage for example) a point in strength lets you hit for 1.3 times 1.5 times elemental factor harder... more damage than a single point of luck which averages to be about .75 damage.

So for "soft targets," get more attack. For "hard targets" like altars or meleeing down desert mobs or guardians, get more luck. Note hard vs. soft targets varies depending on build, for a high strength fighter almost everything is a "soft target." For a rec defender wanting a little bit of offense to not hit like a total gimp, most things are "hard targets."

I also know level difference plays some sort of role, but I don't know exact numbers.

In summary, luck based damage partially ignores defense, which is nice if you don't do much damage. However, once your're critting 95%, against squishies strength is better than luck.

I hope that helps.

Cheers,
KataraOfWater