I find names come fairly natural to me, I do some writing or think leave it for a couple of days and normally it'll just hit me and I'll think 'Yes! Of course that's their name!"
However, if in doubt I tend to go for sounds that I like or that I think match the character. When coming up for a name for one of my first characters my first thought was 'Cleo' but felt it was too feminine. I considered going for just 'Leo' but felt it might be a bit bland for the setting. In the end I named him Cleon, which his friends shorten to Cle.
One of my 'villains' is named Simon; ordinary but I reckoned it suited his traditional, Christian, English background. I also liked the idea of making a generally evil character more realistic.
I'm also not against using nicknames consistently, especially if they are only ever addressed by other characters. I normally base the nickname around one of the character's general traits e.g Hicc got his name from the fact that he constantly hiccups. It was only a few months ago while doing a more detailed character analysis that I realized his real name is Henry.
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