Remember, this is a formal business letter, and should be formatted accordingly.  Place your name, title, and address on the top left of the paper. Place the date below this. Put your boss' name, title, and address below this. Address your boss appropriately. Start with "Dear Mr." or "Dear Mrs." Have 1-inch margins around the paper and use single spacing. Don't indent, just use a double space in between paragraphs. End with "Sincerely," then leave 4 lines so you can manually sign your name. Below this, type your name and title. Don't jump right into "I need more money." Ease your boss into your request by stating that you're glad to be working for this company. For example: Dear Mr. Smith, Please allow me to once again express my pride in working for this company. I appreciate all the opportunities this job has granted me. After the introduction, then establish your value to the company. Your boss may be legitimately unaware of your specific contributions to the company. Seeing them all laid out will help him or her see that you are indeed an asset to the company. Highlight all of the good work you've done to demonstrate that you deserve more money for your work.  You will need to provide concrete evidence of your performance in the letter. Be sure to include specific details, percentages, and figures about your contributions to the company. Avoid general statements such as, “I work hard” and “I do a great job.” Mention how sales have increased in your department, or how customer satisfaction has gone up. If you have any good performance reviews, cite them here. Also be sure to include copies of them with the letter. After establishing that you've worked hard for the company, then state your concern that you're earning less than the industry average. Again, your boss might actually be unaware of industry standards, so seeing all of the research presented may help make your point more convincing.  Include exact figures here. State exactly what you're making, and then state what the industry average is. Point out what the discrepancy is. If you're making above average, point out exactly why you're such an asset to the company that you deserve more. Don't simply ask for more money, tell your boss what your expectation is. This will allow your boss to look at the numbers and see if the company can afford your request.  Write, "In line with my performance for this company, I request a compensation increase of 3% annually, which will bring my yearly salary to $50,000." It is often good to ask for slightly more than you actually want so if your boss negotiates with you, you'll end up closer to what you actually want. Don't go overboard, however, or you'll seem unreasonable. For example, if you want a 2% raise, ask for 2.5 or 3%, not 10%. Always end on a positive note. Don't use any kind of ultimatum, like threatening to leave if you don't get your request. Stress your desire to continue working for the company and that you look forward to the future. Write that you're willing to discuss this matter with your boss any time.

Summary:
Format the letter appropriately. Start with a cordial statement about your job satisfaction. Highlight your past accomplishments. State your rate of compensation in relation to the industry standard. Ask for a specific amount. Conclude cordially.