It's shaping up nicely! I wouldn't add any more colours to the palette, besides the colours for the jets and cockpit.

Fighter jet reference:

Note how the thruster is highlighted with white, as it's a shinier metallic surface, unlike the body, which has a more matte finish.
The light is coming from the top right, as you can tell from the shadow on that front fin, and so the light highlight the thruster along the top, and following its tubular shape.


I think you can recreate this in 4 colours for your piece: as mentioned earlier, a white highlight, then a light grey to smooth out the transition to the grey colour of the thruster (which I call body), to finish with a dark grey for details and shadow.
You may have noticed that to give the impression that the thruster is lit from above, I had highlighted the top of the jet's rim (like you've started to do), and the bottom.

Keep it up! 

That's fine, thesydneylad.

I tried summarising Ambivorous (great post btw) and I's processes:



First, try to find a shape you recognise clearly as a werewolf, even if it's completely black;
Then, you can start dividing the shape into parts: arms, legs, hands, torso, etc. It is easier to do so with colour, note how I matched colours for different parts, like red for the pair of arms.
As I want the sprite grey, I then turn the colours into grayscale.
You can then outline, shade, highlight these parts as you wish - what's good about splitting the sprites into parts is that you can place the highlight independently in each part, which will help give a better sense of volume, like you can tell that's an arm, made up of a shoulder, a bicep, a forearm and a hand, for example.

Hope this is a bit clearer 

This is not a bad start at all! I like the arm and the head, they're pretty readable at that resolution.

My edit:

I tried to recreate the lighting from the reference, which meant working from dark to light, and using the contour to highlight the werewolf's silhouette. I moved the arm and put a kink in the leg to make the shape more readable.
The most difficult part is going to be the shading: I've chosen to dither, because I wasn't happy with my ditherless attempts.

Hope this gives you a few ideas.

Hi,

The design is intricate for a really basic spaceship!

Okay, so judging from the perspective and shape of the ship, I'm reminded of Dodonpachi. What's good is that you've tried putting highlights in where it hits edges, so you've got the right idea. Overall, it could do with more contrast in the mid range.

My edit:


I made the ship Dodonpachi style.
The thing about this style is that it works with straight lines and diagonal lines, with very few exceptions. This makes shading easier, as everything is straight.
The colour palette is a lot more subdued, going into the greys. This style works with mechanical bits being spread out on the machines like patterns in a patchwork, which also done in the Star Wars franchise for its spaceship designs.

The lighting comes from the top-back, highlighting the edges, and making the sides and the face closer to us darker.
I would say the way you can build designs in this style is like an architect's elevation drawing, where you start with a surface which is extruded, and thus becomes a 3D shape.

In terms of palette, if you want to do "purist" pixel art, you should avoid transparent brushes and brushes with anti-alias or a smoothing option on: this way you don't end up adding a lot more colours accidentally. You also have to consider where you can re-use colours rather than picking new ones, so it's important to keep track of the colours you've used.
Optimising colour palettes really depends on what you want to optimise the sprite for: visibility (high contrast compared to background), readability (high contrast within the sprite), the mood (ex: if the game happens underwater, things tend to have some blue colour in them), and the textures in the sprite (ex: imitating wood is not the same as imitating stone).

Otherwise, you can do indexed digital  art, where you use any kind of brush and/or layer mode you want, and the index the colours in the image - this reduces the colours to either a default colour palette, or a palette of your choice.

Hope this helps.