Hi,
Jonathan, i remeber your build, i looked around and the encoder was around 60-70euro. I was thinking of something like :

http://www.ebay.es/itm/Photoelectric...3984c5d&_uhb=1


http://www.ebay.es/itm/Arduino-Photo...51f752c&_uhb=1


or to fashion something from these:

http://www.aliexpress.com/item/DC-10...723604177.html



One interesting i found was there very cheap magnetic sensors encoders /~10.000rpm max/ that count the teeth of a pulley, just an idea for a cheap closed loop.