Potency is simply another factor in the damage calculations, and is used to compare abilities against each other. It will always remain static in the skill description, regardless of your stat changes. Regardless of the specifics, you can generally assume a 200 potency ability is twice as potent as a 100 potency ability. To figure out further involves the following:

1: Anything with a potency is affected by weapon damage, the main stat for the class (strength for melee physical abilities, dexterity for archery abilities, intelligence for offensive spells, mind for healing spells), determination, and is subject to critical hits.

2: Certain abilities have an alternate calculation, covered in the ability description. Examples include Stoneskin covering 10% of the subject's max HP, and Lustrate healing for 20% of the subject's max HP.

3: Some abilities straight up can't be enhanced by stats. Shroud of Saints is one of them.

Mage's Ballad is quite possibly in the 3rd category.