The City manager is determined to add more quality to his squad for their return to the Championship.
However, he accepts that the club may miss out on potential targets if the price is not right, as Mandaric warned last week.
"I have had some good meetings with Milan but it is important to remember there are not unlimited funds available and the money is coming directly from the chairman, so I have to spend it wisely," Pearson told the Leicester Mercury.
"You do as much as you can to eliminate the risks and I feel a moral responsibility to do the homework on any potential signings. Sometimes we will be successful and sometimes we will not be.
"We identify players and we have our own valuation on them but there is a limit to where we are going to go and, when you reach that, you have to move on and look elsewhere as we won't be held to ransom."