FA chief executive Martin Glenn believes it was "naive" to pay a high salary to former England managers and indicated future contracts should be based around performances.
The process of finding Roy Hodgson's successor following England's embarrassing exit from Euro 2016 at the hands of Iceland has already started as Glenn, FA technical director Dan Ashworth and vice-chairman David Gill convened to start a widespread search.
United States boss Jurgen Klinsmann is now favourite with the bookmakers after widespread reports emerged that former front-runner Gareth Southgate was not interested in the post at this time. Other candidates are said to include Arsenal manager Arsene Wenger and former England boss Glenn Hoddle.
The salary of England managers has long been a divisive subject. Hodgson's annual £3.5m wages saw him as the highest basic wage-earner of all managers at Euro 2016.
However, that in itself was much less than previous England managers such as Fabio Capello and Sven-Goran Eriksson were paid.
Glenn believes the next appointment will come with more financial scrutiny, while still offering an attractive package for a top-class coach.
"To start off, it has to be results-orientated," Glenn, who has been quoted in several national newspapers, said.
"The argument against Sven and Fabio in the past was that it wasn't benchmarked. We were just naive.
"What are benchmark earnings for top-quality football management? I think you have to look at it in that way.
"So, to get a really good person and they are earning £4m in a club, you have to be in that zone.
"We need to be in the zone of what the world champions [Germany] are paying and, competitively, how to make it attractive to someone.
"We are going into the market and you've got to pay a market attractive rate, but no one wants to be naive."