get more data about their customers, what %s stay for for 1,2,3 years and make an informed decision.. long term, although sounds great in theory if you're not greedy, is not always the correct choice.
Is this a product you're selling or planning to buy?
It's simple maths, if you plan to stay with them for a year then option one. If you plan to stay with them a minimum of three years or buy more than one product - second option it is.
25% - More cash upfront. Use the cash and reinvest in a new product/more customers to this product.