Is there such a thing as knowing when's the right time to upgrade a weapon? No, seriously, if you don't want to increase it's damage at the wrong time and all that, especially with Daedric artifacts.

You upgrade when you start noting that your weapons aren't having the same effect they used to.

With Daedric Artifacts I always wait until my smithing is 100 before I upgrade it. Other than that, whenever I have the materials.

I upgrade whenever I'm close to a forge and have the available materials...

By the time I have weapons that it would be a waste to only upgrade a step or two, I usually have high enough smithing that it'll be a pretty serious upgrade anyway. Although I've had an ebony sword since something silly like level 6 on this playthrough because Llerethis went to Solstheim fairly early and happened to find one on a draugr that Teldryn and Jenassa helped to kill... So far, I haven't upgraded it at all, because I'm using SkyRe and you can't upgrade things until you have the perk for that material - my smithing's around 90, but I haven't invested the perks yet. I'm level 37, though, and the ebony sword plus a decent 1H skill is doing fine (switching between that, destruction and bow to try and keep balanced, too). By the time I'm able to upgrade it, I'll probably need to, though.

Because I play as a sorceress, I do not upgrade my silver sword or ebony sword. Instead I enchant them. When I play as a wood elf, I have found that one can tell when the time has come to upgrade their weapons. It is just a feeling one has, and it depends on how you play and what you play as.

Maybe this is a silly question, but why wait to upgrade? You can always upgrade again when your smithing skill is higher.