Guardiola praised City for sticking to their guns and walking away from talks over Mahrez after Leicester demanded £95million for the Algeria star.
"I admire the club for having parameters," said Guardiola. "Maybe in the future we can buy players for £100m but it will be for a special player and at the moment we cannot afford it.
"When a player doesn't come it's because it's not possible. I understand completely. We make an offer and the clubs and the managers want more. Sometimes the deal is done, sometimes not. It's not a problem, believe me.
"People say that only we have money. We are not the richest club in the world. We have passion, always have amazing workers, a club with an amazing structure.
"I say that because I follow the club. We bought a lot of players, not just one, two or three. If you want to play this way, I'm not a magician.
"I have good players, amazing players. The club has provided me with them. To compete, you need good players, and they are so expensive. We have a level and we cannot go above it.
"All the players we bought, it was £40m, £50m, £55m. It's a lot of money but the big difference is that we need to buy a lot."
Informed that Mahrez had said he is 'gutted' to miss out on a move to the Etihad, Guardiola replied: "He's a Leicester player. I don't talk about it too much. The window is over, the guys who are here will finish the season."