Well, I'm certainly no DJvenom or Sinkin, but I did a little edit (made a quick and kinda meh background for it just because):
In my experience, I've found that small sprites don't need a whole lot of colors, or at least not a lot of shades of each color. Having too many shades for a small sprite will make it blurry, losing definition. And when two colors are very close to each other, you can sometimes find a color in between them and combine the 2 colors to just 1. I did that on the hair and skin shadow color.
The 3 sprites, from left to right: Your original, my contrast edit and color merge (just the one color merge), made even more adjustments in an attempt to make the depth seem more correct and to further give it definition.
Obviously the edits are just examples and could still use some work. I'm sure that DJvenom, Sinkin, or Leduardo, could be of more help, as they are all much more experienced. I've still got a lot to learn, but I hope I helped regardless.