I gave my group a droid with the intention that they can use it to upgrade/mod equipment. What would be a good way for them to have to pay for it? im not wanting to have them just hand the droid a piece of equipment and a second later, it hands it back all modded out. Should i have them pay with credits (though a droid would have no use for credits) or something else?

The money you pay is for parts to make the mod, so they aren't paying the droid they are buying what they need to add the mod to the attachment.

Yeah, you can say the credits actually represent an investment in the materials needed to modify the equipment in question.

Not to mention that the droid also needs to make Mechanics checks to actually install the mods. If the droid sucks at this, the players won't get their mods. And if they mistreat the droid it's not going to feel motivated to do its best work, so that's a setback die or two right there.