Step 1: The pic, and white canvas. I left everything else coloured for the tutorial but the skin. The image is shown at 100% of the original size. About 400 resolution.

Step 2: Pic a base skin colour for your first layer. For girls I tend to choose something very close to white on the colour scale, and for guys something a bit darker (if you give your characters different skin tones in a image with 2 or more figures, the end result is a tad more realistic). I like my skin tones to be very light and creamy, but you may like yours darker depending on how you colour your pics.

Step 3: Chose a second base colour for your next layer --this one should be a bit darker than the first but a colour that is not too dark where it looks unrealistic --unless you want a "dramatic" shadow look to the skin. For the type of skin I did for this image I went with an almost cell shaded look, so I applied the second base colour as you would if were doing a regular cell shaded image. Another thing to decide on besides the colour is where you want the "light source" coming from. Choose which side of the face you want in the shadows. In this case I chose the left side of her body to be directed away from the "light".

Note: If you want to go for a more realistic look I would take the second base colour and add it on in layers (I usually have the "opacity" of the colour on a setting of about 5 --where as the cell shaded look is set at 100). Apply the colour on gradually, and make the first base colour blend with the second. Apply the second base colour darker and lighter in places to create certain effects of shadows on the skin.

Step 4: For this step I tend to deviate from some artists so my pics have a little more of a "unique" feel. I pick a third colour for the next layer, and it's usually a pink, to apply to the image. For this step I set the "opacity" of the colour on a strength of about 2. In turn I apply the colour in layers to build up the colour, and have it fade to blend in with the two base colours. In some places I apply it darker, and lighter in others. In this pic I decided to keep the pink highlights pretty light, but in others it's very dark. You can also use other colours besides pink, like red, purple, blue or whatever your heart desires. I find that blue is hard to work with, but purple is rather easy.

This technique can be used the same way for a more traditional look also. Or you can leave this step out all together if you don't like this look.

Step 5: In this step the colour I always choose is white for the next layer. This is where I'll make the pic look less cell shaded. I set white on a strength of about 4 and build up layers as I did with the pink, but this time I'm going for a highlighted look. My goal is to make the lighter areas brighter and smoother. And for the rest of the skin in the darker areas, I'll use it to smooth all the colours together. The end effect is a simple, but a lot nicer than just a cell shaded job.

Step 6: I like to go a step further and gives the characters my "trademark" (if you will) shading around the eyes, or as most people call it --a makeup/eye shadow effect. For this I pick another pink, one that's usually a bit redder than the colour I chose for the skin, but any shade will work that matches your colour scheme.

But of course I know most artists don't like this look for their images, so I would choose a darker skin tone for the eyes to perhaps darken up the creases around the eye a little, and also use the chance to put a little colour on the lips.

In the end, after practice this technique is rather simple and this part of your picture should go by fast. This is always my favorite part of the pic when I work on a project. Of course you're going to want to play around with my examples to get comfortable with something that works for you. I also use the gist of the skin technique for when I shade hair, clothes and just about everything else with slight deviations.

For a more traditional pic I use the basic of this tutorial but use more colours, and spend lots of time on the placement of darker and lighter colours. But it's almost the same in the end. Having a couple pictures to base off where you should place shadows also helps a lot in the beginning.

And this is the end product: