Currently we can set labor rates as an inventory item and with the new Contracts option we can set overrides for each customer. This is good but not great.

To compete with other PSA's out there I think that Rates need to be separated from inventory and contracts. For example having global rates and per customer rates, and having rules to calculate the rates automatically based on Work Types (tech, engineer) and job types. We could definitely capture a lot more billable time and higher priced work if these abilities were there.
The tech simply selects what work type they are doing, and selects from a drop down what rate to use (after hrs, onsite, ...) and the system calculates the billed rate.
To take it further, these rates may or may not go against a fixed fee contract. That way certain work types can be billed if they are not covered in the contract, and the tech doesn't have to be the one to decide.
This becomes way too complicated when rates are just inventory items.