From the MAKE Forums:

Hobby servos are great for quick jobs, but if you attempt to do very precise work with them, their limited resolution quickly becomes an issue. Forum user came up with an elegant solution, using a high-resolution magnetic sensor to detect the rotation:

Modified continuous-rotation servos are used extensively by roboticists due to their small form-factor, enclosed motor-gearbox, ease of mounting and high-availability. Some users keep the original drive electronics and the potentiometer feedback element but this approach allows for limited position control and velocity control / profiling. Others tend to remove them and use external control/drive boards and custom-made encoders. Ideally one would prefer to have the feedback element and the new drive electronics enclosed inside the servo. Unfortunately hacks involving optical devices and code-wheels have very limited resolution and require a lot of precise work.

Magnetic encoders use spinning current Hall technology to measure magnetic flux distribution across the surface of the chip. They typically come in high resolutions and require very few external components. The operational setup requires a small disk magnet with circumferential field distribution to be attached on the rotating element whose angular deflection is to be measured, and in close proximity to the sensor IC.

This hack utilises Austrian Microsystems’ sensor IC as feedback element for a modified servo. The servo to be hacked is the popular Hitec HS485 HB.

Of course, you could probably just buy a higher resolution servo, but where’s the fun in that?