I never really understood that. Why are other companies more willing to give you a raise? Is it just irrationality by your boss?
The way I see it, you're worth more to your current company. You already know their stuff, and don't have to get up to speed. And you know the stuff you made for them well. And to them you're not an untested new hire who could flop. So in a rational economy, on average and when you're a good fit where you are, you ought to get the best offer from your current company.
Why would your company want to pay you more than they are right now? What is their incentive? Retention?
Other companies are willing to pay you more because they need your expertise and you are offering a higher level of skill/experience than you offered the company you are with now.
Retention is a very good reason to do so; replacing someone good is always hard (and expensive) in terms of hiring and ramp-up times. If you don't adjust your employees' salaries to reduce the incentive to job-hop in order to get a raise, you're basically asking your best employees to leave.
Your current company's budget doesn't automatically go up just because you've become more skilled and experienced. People and organizations change, and their value to each other does too.
The way I see it, you're worth more to your current company. You already know their stuff, and don't have to get up to speed. And you know the stuff you made for them well. And to them you're not an untested new hire who could flop. So in a rational economy, on average and when you're a good fit where you are, you ought to get the best offer from your current company.