A 3-0 away loss to Tunisia fold Etoile Sahel in the final preliminary round saw the Ghanaians exit the elite continental inter-club championship on a 4-3 aggregate score.
Kotoko join 15 other losing teams into the Confederation Cup where they enter the competition in the play-off round.
“This [Confederation Cup] is our level at the moment," Zachariassen told the Kotoko Express App.
"We are in Confederation Cup, I think that’s the right level for us.
"We’ve got to have to be realistic.
"We’ve got to be realistic because we have only worked together for three months."
The Porcupine Warriors' wait for a place in the group stage of the Champions League for the first time since 2006 goes on.
Zachariassen's side will find out their opponents for the Confederation Cup play-offs on October 9, with the first leg fixtures scheduled for October 27.
The winners advance to the group stage, which Kotoko reached last season.