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Actually convincing them is the easy part, keeping your job after the dust settles is another matter entirely.

The best approaches would be:

• Avoid making it seem like you were making a threat or ultimatum, it would be best to ask for a pay raise BEFORE mentioning any offer




• Go to Salaries.com or another site that gives salaries for your industry.




• Have a "Sales pitch" ready. Justify WHY you are worth more money. Include permformance history and comparable salaries.




• Emphasise that you WANT to stay with them. They are more likely to offer you more money if they are fairly certain that they are investing in the company's future as well instead of just yours.

If all of this fails and you get an offer, don't tell them how much the offer is.

One thing any recruiter, HR professional, or seasoned person in the workplace will tell you is...

NEVER ACCEPT A COUNTER OFFER

Here's why.

1. You've proven that you're disloyal (or that is how it will be seen) and therefore, can't be trusted.


2. Your company will be finding a replacement for you at the first opportunity. You are now a flight risk


3. Your coworkers will resent you.

I'm going to go against the grain here and suggest, with some caveats, that you go to your boss and be completely up front about it.

I went through basically the same thing at the start of my career. I had taken a job as an entry level programmer. I actually took a slight pay cut from the job I had as tech support. After a year, I felt I had proven my worth. My boss kept promising me a raise, but never got around to it. For what it's worth, I don't think his promises were false, he was just a really busy guy and there was a lot going on.

My wife and I were struggling financially, though, and intended raise or not, I needed to be making more money. I started looking and got an offer for significantly more than I was making. I took it to my boss and said "Look, I don't want to leave. You gave me a shot as a new programmer and I truly appreciate it. However, my wife and I are struggling financially and I really need to be making more money. You don't have to completely match this, but if you can't do something, I'm going to have to take it even though I would much rather stay here."

They ended up completely matching the offer and I stayed on with the company. There were no long term negative consequences and my boss even kind of apologized to me and said "I guess if I had gotten around to your raise, this wouldn't have been necessary."

Now, for the caveats:

1. I don't recommend this for everyone. You know what kind of
   organization you work for and what kind of person your boss is.


2. You also know, or at least should know, how valuable you are to the company. Regardless of how good you are and how much your boss
   likes you, there's no way they will give you a $50,000 raise if you
   are only adding $40,000 worth of value to the company.


3. Everything I told my boss was the truth, it was not some kind of negotiating trick. I do not recommend anything other than you
   telling the truth.


4. This is a one time kind of thing, not something you can do repeatedly. You doing this one time because you feel you are
   significantly underpaid is one thing. Doing it every time you want a
   raise is going to get extremely old extremely fast.

How do I convince my employer to match the salary of my new job offer?

The best way to do this, as you mention elsewhere, is not to tell your employer about the offer. Instead, highlight your performance and accomplishments to show why you are worth a raise in salary. Show how you are currently paid less than market rate.

You really have nothing to lose in asking for a raise, because worst case scenario the employer says no, and you simply accept the new job offer.

By explicitly telling your employer about the offer, you risk your employment.

As soon as you tell your employer that you have a new job offer, your employer may view and treat you differently. An employer is in the business of keeping employees. Once you raise the idea of your leaving, your employer may regard you as a risk.

People generally don't interview with other companies because they are happy, or content -- it usually means they are interested in other things.

Even if your employer matches the salary, your employer really doesn't know if you're going to stick around. Maybe in 6 months you'll actually decide to leave.

It may be just a matter of time before your employer decides to replace you with someone who your employer considers to be less of a risk.

If that happens, you'll be out of a job, and have no leverage when trying to find a new offer.

The answer to your dilemma is not to convince your employer that you are worth a 60% raise but rather take the job that is offering a 60% raise. Here are the reasons why:

• You don’t know for sure if your annual raise will close the gap by 40% much less negotiating for 60%


• Your current job will not last nor will the people working with you. To not take a job offer because you’re familiar with your current position or the people you work with isn’t a reality based or logical solution.

If by chance, you did successfully negotiate a 60% salary raise, and your co-workers catch wind of this…expect the mood in the office and interactions with you to be adversely affected. The long-timers in your group will be pretty upset that someone with a years’ experience getting a 60% raise for doing the same job.

Take the new job and enjoy the raise. Grow within the new position and if after a while you miss the old gang, wait for an open position, reapply, and next time do a better job negotiating your salary.

"Give me what I'm asking for or I'll leave" never ends well for anyone. You want to work for an employer that values you and treats you well based on your merit and your contributions, not your ability to make threats or leverage another offer. I think you've picked up on this based on your statement that you want this to be mutual thing - so leverage the mutual advantages. Make sure you understand and can explain why you're a good employee for your current employer before you ask for anything.

It's certainly OK to use an external offer as a data point to determine your market value, but you need to base the actual ask for a raise on your value to your current employer - your contribution to projects, your skills, your growth, and so on.

60% is a huge gap in compensation. What are the extenuating circumstances? Were you brought in under a more junior position? Is your current employer nonprofit or of some other status that usually indicates lower compensation? What is their structure for determining compensation and raises? You mention an upcoming raise (that you apparently already know the value of), do you have the ability to formally influence that process? Can your manager even give discretionary raises based on performance?

You could present the fact that you have other offers as "market research" you have done.

Rather than defending a pay rise with the alternative of quitting, you could approach your employer with:

Hey, I have received another job offer with a significant pay rise. I
do love working here, so I would rather stay. Would you be willing to
negotiate my salary so it matches my market value?

When I was negotiating for a raise as a part time employee I found market research and asked for what I thought wast he bare minimum - underpaid doesn't' even begin to describe the amount of money I make. My boss predictably said that she didn't know how things would go so I asked her who her boss was so I could talk to them about it. After informing me that's not how things work she got me a meeting with him. A couple of months later a internal promotion opportunity arose - not something that's common in my department - and I was able to beat out a phd student who was very close to defending his thesis in no small part because of the preparation I did while making the argument that I was worth more money. I do not have a college degree.

Here's a list of things that I did.

1. 
   

   Market research.

   
   
   

   I went to the internet to quantify how much money people in my field made. I used these figures and what I knew about wages in my area and sector to outline what I thought was the absolute minimum fair compensation for my skills. If I had done this now, I would have strongly argued that I was worth a lot more than that because frankly my pay is still a massive joke. Ask for what you're worth, not for what you'll stay for.

   
   


2. 
   

   Organized planning and delivery.

   
   
   

   I wrote down the important facts and figures about what I made and I planned out what I was going to say to my boss. I then took the 2 week long wait to talk to her boss - she made the mistake of giving me his name so the meeting was happening with or without her blessing, my bluntness made that pretty clear and my boss is a really good boss so she wasn't opposed to increasing my wage - I planned out what to say to him and how to go about it. The actual conversation was almost nothing like what I had planned, but I was able to guide it where I wanted it to go slowly but surely.

   
   


3. 
   

   Know what you're talking about.

   
   
   

   My boss's boss did not ask me what I thought he would. I'm pretty sure he didn't even ask any questions about wages. It was okay though because I genuinely knew my stuff, and I was able to guide the conversation to highlight the points I believed to be important.

   
   
   

   I know it worked because my boss's boss literally congratulated me on my promotion like two days later on my way into work. The only thing I would have changed is asking for more money being more serious about finding other job offers in my field. I did interview for another company and that went very well, but the job was further away from my field than my current one so I didn't take it.

   
   
   

   The thing about this strategy is that when it fails, you have to move on. I only took the promotion because I was got the job offer the same day of my interview for the other company. If the job offer had come any later, I would have made plans to work somewhere else. My wage was, in a word, insulting.

   
   

Market Worth

Phrase the conversation as more about you being paid fairly for your value in the market, instead of an ultimatum. Essentially, the offer you received, unless there are some extenuating circumstances, shows what your value in the industry is more or less. Something like

"Hey boss, I like working here and am happy with the company, but I do feel like I'm not being paid for my value. For example, this other company headhunted me and was willing to pay X. I truly prefer this company but I don't feel the respect is returned when I am paid 60% under what I should be."

Just let them know that you prefer their company, you are being underpaid for what you're worth in the market, and you're preferable outcome is for your company to make some indication that they respect you and will help close the gap.

Industry

I believe most of the other answers are from a tech industry perspective, and just wanted to point out that other industries have different standards. In finance for example it's very common for employees to receive bid-aways and the from to respond with a counter-offer. Employees who accept the counter are in general not punished afterwords, assuming they went about the process in a professional and respectful manner.

How can I convince my employer to give me a bigger raise that will either match the offer or is at least close

An easier option is to get raises through normal promotions/yearly reviews. If you did well, ask them if you can get a pay raise. Or ask them about a promotion to get the pay you want. I think in this situation you're not angering or threatening your employer. You're just asking and there's nothing wrong with that unless you want a huge pay hike.

You can present the offer document but the possible outcomes don't really look good for you. From my own experience and observation, they'll tell you either:

1. They'll tell you good bye in which case it's all good because you got a better offer in hand.


2. They'll say no, but knowing that it's possible you'll leave in the very near future, they'll look to fill your position and fast.


3. They'll say yes, grant you the pay raise, but they know you'll likely quit anyways - as it is historically true in most situations. So they'll look to fill your position then either fire you or bump you down to a lesser role knowing you'll quit (this is the most likely outcome).

With #3, it's entirely possible you'll be in a situation where you don't have a job offer and you're either stuck at the company or let go of. Basically by presenting the documentation, you'll set yourself up to a lose-lose situation. Your employer is caught off guard, and to protect their business, they need to have some assurance that a employee isn't on the verge of leaving. If you got a better job offer, actually go with the better job offer. Just tell your current employer goodbye and leave.

It's very tough to ask for a 40% increase because if you're that underpaid, your boss is unlikely to change tune now. Maybe they can't afford to pay you that much. Still, it happens.

Here's how I would do it:

Step 0a: Get Over It

Negotiating your salary is inherently adversarial. Nonetheless, it doesn't mean you won't be friendly or polite with your boss, or that he won't be the same with you after this is done.

That said, do not confuse being friendly with being your friend. This is a business transaction, and this is why it's inherently adversarial.

You may smile and laugh and reminesce about the old times, but behind that facade you must remember that he's trying to cheat you out of tens of thousands of $currency. Don't believe me? How many years do you plan to stay there? Multiply that by the 40% difference - that's the amount you stand to lose.

Step 0b: Plan

Figure out what would make you happy. Do you want the full 40% increase? Would another perk make up for some of it? A promotion, perhaps?

Write this plan down and make sure that, if you do get some alternatives, you're still happy and won't be resentful at letting an opportunity go by.

Remember, the final offer must be fair to you, not your current boss.

Step 1: Submit your Notice

This tells your boss you're serious and secures the offer you currently have. This is your position of strength from which your negotiation will happen.

Step 2: Negotiate

Tell him you really want to keep working here but are not happy leaving that much money on the table. This is pretty much what you wrote above.

I don't like to reveal my cards when negotiating and I wouldn't reveal the exact number. I would mention it's a high percentage and if a counter offer happens, I'd keep looking disappointed until I got what I wanted - or more.

But that's just me. If you're happy getting that 40%, or close to it (remember step 0b?) then you should go for it. If they can't give you the full amount, start asking for things that would make it up for you, those things that you thought about before.

And if it goes wrong, you can always walk away to your cozy new job.

A lot of different answers here, but the solution—from my perspective—is to simply stay at your new job. Why? Easy!

You will be getting a 20% raise at the current job and—with that in mind—in 3-5 years your overall salary might increase to around 60% by then anyway. So why quit a job you know to go into an unknown place for a 60% pay increase.

The reason being is unless you are being paid a really low salary right now, you need to ask yourself: Why is the other company offering you 60% more than what you are getting now? And how long will you last there? And a 20% per year pay increase is about 15% higher than the 5% per year increase most of the world deals with; 20% is 300% more than the typical pay increase most of us deal with.

The reason being is that in the tech industry while consistently high salaries do indeed exist, a lot of high paying tech jobs lure people in to only burn them out in 6 to 9 months. So what is the value of a 60% increase in pay if in 6 to 9 months you want to quit due to work stress and general health issues?

Unless both of these jobs offer the same exact level of work with the same exact level of work expectations and environment, I would advise you to not quit your current job. Again, a 20% incense in salary per year is excellent. 60% increase in a new offer could just be a carrot on a stick to lure you into a bad job that will stress you out in less than a year.

And here is an edit based on this comment made by the original poster:

“I am from Pakistan, I was headhunted and I believe the reason for them giving me such a high salary is that I have specific experience in the techs they are using. And the reason it is 60% is because that the total amount I told them and they said yes.”

You got headhunted, demanded higher pay and got exactly what you asked for? Sounds fishy as heck.

Do you genuinely have an actual offer from this other company? Have you met with people? Been interviewed? Have a contract in hand? Because if the whole premise of this question is based on a promise made by a recruiter without an actual contract in hand, this is all “puffery” and nonsense. Don’t sabotage your role with your current employer because of promises that are “too good to be true” made by a recruiter who only has their best interests (and not yours) in mind.

In the existing business scenario all employers deal with their workers in the same context. They always look reluctant to give due benefits to employees unless they have no other option. In your case you have already high salary offer and you still don't want to leave the company. If you feel that you have established your worth than you must claim your boss for increased salary upto your desire on the basis of your performance. After detailed negotiations in case your boss did not agree with your demand than as a last resort you should show him your new job offer letter with offered salary details. In most of the chances on the basis of your performance he will offer your at least near to your new job offer.

In case he still not accommodate you as per your desire than it is right choice to join the new setup to avail more career appourtunities.

Most answers seem to focus on the US where the potential consequences for upsetting your employer (being fired/replaced) are much more severe than in the EU, where you can't simply be dismissed because they think you are not loyal.

The best way to pitch it is that you want to advance your career and need to earn more to achieve your goals. Say that you would prefer to do it at your current company but there needs to be a clear path, which involves keeping up with market rates for remuneration as well as other career building things like goals, learning new technologies and promotion.

In other words, show that you don't just want more money, you want recognition for your value and you want to progress.

Be aware though that there might simply not be a business case for paying you that much to do the job you do. You can counter that by offering to accept more responsibility or adding more value some other way, or you can just accept it and move on.

In the EU you are unlikely to be punished for this. Employment laws will protect you from reprisal.