Traditional rotary encoders are expensive and too good for my hobbyist/research needs. The cheapest I’ve found are about $300, plus the several hundred dollars it costs us to set up an account and buy one. For many applications it would be very, very helpful to not have to give the system hints about where its “arms” and “legs” are via a generally tedious and time-consuming zeroing procedure (I’m looking at you, Meade Telescopes.)
Using an encoding ring similar to my example (below), use a Parallax ColorPAL and pre-calibrated tables (E.g. R:0 G:0 B:0 = 0 Degrees) you could drop the cost signficantly, especially when you consider that a Parallax BasicStamp could also be used for other control/sensing activities at the same time. To make this simpler to program, although more expensive, you could print separate Red, Green, and Blue rings where the differentiating factor is the value (black<->white).
The sensed area doesn’t have to be a ring if you use colors, but could be any shape, which might be interesting for sensing X-Y positions.