Developing options in a negotiation yields multiple benefits.
Number one is that it helps preserve a long-term working relationship. Even if you cannot come to an agreement over the current opportunity, you never know when a possibility might arise with the same company or people.
Number two is that it allows a higher probability of actually coming to a working agreement. And number three is that you may be able to drive cost down or increase profit dollars with a creative solution. Prepare a walk away position, but do not be adamant about issues that are secondary to conducting business.